Americans currently owe a record $1.14 trillion on credit cards, according to a report from the Federal Reserve Bank of New York released Tuesday.
The average credit card balance per consumer has reached $6,329, reflecting a 4.8% increase from the previous year, as reported by TransUnion’s quarterly credit industry insights.
Both the New York Fed and TransUnion have observed higher credit card delinquency rates. Approximately 9.1% of credit card balances turned delinquent over the past year, according to the New York Fed.
Michele Raneri, TransUnion’s vice president and head of U.S. research and consulting, noted, “Borrowers with revolving debt are maxing out their credit cards, which is a strong indicator that people are financially stretched.”
Time to 'reassess' revenge spending
Ted Rossman, senior industry analyst at Bankrate, explained, “Credit card balances briefly decreased in 2020 and early 2021 due to pandemic-related factors, including government stimulus checks and reduced spending opportunities.”
“However, since early 2021, credit card balances have surged by 48%, driven by increased spending on services post-pandemic, coupled with high inflation and elevated interest rates,” he added.
A recent Bankrate report highlights that consumers are eager to spend on travel and entertainment to make up for lost experiences during the pandemic.
Credit cards remain one of the most expensive forms of borrowing, with average rates exceeding 20%—close to an all-time high.
“With credit card balances and average rates both at record levels, it’s crucial to pay down this debt as quickly as possible,” Rossman advised.
