Americans owe a record $1.14T in credit card debt as inflation squeezes
foxbusiness.comFOX Business' Gerri Willis reports on the alleged 'out-of-control' costs associated with going back to school and how much families may expect to spend this year.
Americans are increasingly turning to their credit cards to cover everyday expenses, with debt hitting a new record high at the end of June, according to a New York Federal Reserve report published Tuesday.
In the three-month period from April to June, total credit card debt rose to $1.14 trillion, an increase of $27 billion, or about 1%, from the previous quarter, according to the report. It marks the highest level on record in Fed data dating back to 2003.
Credit card delinquencies continued to rise from their pre-pandemic levels in the second quarter. As of June, about 9.1% of outstanding credit card debt was in some stage of delinquency, up from 8.5% the previous quarter.
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The rise in credit card usage and debt is particularly concerning because interest rates are astronomically high right now. The average credit card annual percentage rate (APR) hit a new record of 20.73% last week, according to a Bankrate database that goes back to 1985. The previous record was 19% in July 1991.
Credit card delinquencies continued to rise from their pre-pandemic levels in the second quarter. (Photographer: Andrew Harrer/Bloomberg via Getty Images / Getty Images)
If people are carrying debt to compensate for steeper prices, they could end up paying more for items in the long run. For instance, if someone owes $5,000 in debt – which the average American does – current APR levels would mean it would take about 279 months and $8,124 in interest to pay off the debt making the minimum payments.
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