- Nearly half of Americans have credit card debt every month
- Americans’ credit card balances rose to $1.08 trillion last September
- Do you have credit card debt? Tell us your story at money@dailymail.com
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Half of Americans are carrying credit card debt from one month to the next as the raging inflation of the past two years leaves a scar on the nation’s finances.
A new study from Bankrate found that 49 percent fell into the so-called “debt revolver” category as of November 2023 — as more and more households are forced to use their credit cards to make ends meet.
This is an increase from just 39 percent in 2021, the financial services company found.
Worse still, three in five of those in debt – some 56 million people – have owed money for more than A YEAR.
According to the Federal Reserve Bank of New York, Americans’ total credit card balances rose to a record $1.08 trillion last September.
Nearly half of Americans will be in credit card debt overnight — and the majority for at least a year — as the legacy of high inflation takes its toll
Heavy credit card borrowing increased this figure by $48 billion in three months and by $154 billion in the year.
Interest on these debts has also risen as persistent inflation continues to erode household budgets.
While inflation cooled to an annual rate of 3.1 percent in November, it is still above the Federal Reserve’s target of 2 percent, keeping borrowing costs at a 22-year high.
According to the latest data from September last year, the Federal Reserve reported that the average interest rate for revolving credit – with a variable interest rate – was as high as 22.77 percent.
“According to the New York Fed, Americans’ credit card balances have skyrocketed 40 percent in the past two years,” said Ted Rossman, senior analyst at Bankrate.
“And interest rates for most cardholders have risen by five and a quarter percentage points over that period as a result of the Fed’s rate hikes intended to combat inflation.
‘It is therefore no wonder that we see more and more people in debt for a longer period of time.’
The Federal Reserve today kept interest rates stable for the third time in a row, but indicated that multiple cuts are on the way in 2024
Ted Rossman, senior industry analyst at Bankrate, said there are several steps Americans can take to tackle their credit card debt
The most common reason for borrowers not to pay off their plastic each month is emergency costs, according to the survey.
About 43 percent of cardholders said they carry a balance due to unexpected costs, such as medical bills or home repairs.
Another major reason why people have credit card debt is everyday expenses. 26 percent of balance-carrying consumers say groceries, child care and utilities are the reason they have credit card debt month to month.
There are several steps Americans can take to tackle their credit card debt.
The sooner you can pay off your credit card debt, the less interest you will pay.
At an average interest rate of 22.7 percent, a $5,000 balance with a monthly payment of $469 over 12 months will cost you $636 in interest, according to Bankrate.
If you take 24 months to pay it off with a monthly payment of $261, your total interest payment doubles to $1,267.
“If you have credit card debt, this is probably by far your highest expense debt,” says Rossman.
“My top tip is to sign up for a 0 percent balance transfer card. This allows you to transfer your existing debt to a new card, which will not charge interest for up to 21 months.”
Americans may also consider paying off their credit card debt with a personal loan at lower rates to save on interest, or seek help from a licensed financial advisor.