A recent report by consumer credit reporting agency TransUnion revealed alarming statistics showing that consumer credit card debt has surged to its highest levels in a decade. As inflation continues to impact everyday expenses, consumers are grappling with mounting financial pressure, causing delinquency rates to rise.
According to TransUnion’s latest findings, the average credit card balance now exceeds $6,000. Total credit card debt in the U.S. has soared to an astonishing $1.08 trillion, a record high, The Hill. This figure highlights the growing financial strain experienced by households across the country.
Charlie Wise, senior vice president of Global Research and Consulting at TransUnion, describes the situation as consumers trying desperately to “keep the house of cards from collapsing.”
The rise in credit card balances is accompanied by an increase in delinquency rates across the board, affecting mortgages, auto payments, and credit cards. These trends underscore the financial hardship experienced by many households.
“After the covid-19 national disaster declaration in April 2020, overall card utilization declined to historically low levels with slight seasonal fluctuations,” Equifax analysts said in their October report on national consumer credit trends.
The recent Federal Reserve rate hikes, totaling 11 increases, has pushed credit card rates up by more than 5 percent. The average annual percentage rate (APR) has now crossed the 20 percent threshold, creating a significant financial burden for those carrying high balances.
Despite the challenges, an additional 20.5 million new credit accounts were opened recently. Consumers are seeking additional liquidity amidst the economic pressures, leading to a record tally of almost 538 million credit cards in circulation.
“Americans are addicted to credit cards, no question,” Howard Dvorkin, a certified public accountant and the chairman of Debt.com, told CNBC.
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