America’s credit card debt hits record $1 TRILLION: Households opened an additional 5.48 million accounts this year as average interest rates rose to 20.53%

America’s credit card debt has broken the $1 trillion mark for the first time in history, data from the Fed shows.

Credit card balances rose $45 billion in the second quarter of the year as interest rates – which recently hit their highest since 2001 – and rampant inflation continue to weigh on households.

Experts called the amount “staggering,” with numbers also revealing that credit card delinquencies had hit an 11-year high.

Previous estimates had put the country’s credit card debt at $1 trillion, but the Fed’s analysis has historically remained more conservative.

However, researchers from the agency said they saw “some early signs” that household debt had begun to stabilize.

In a blog post accompanying the report, they wrote: “Despite the many headwinds American consumers have faced over the past year – higher interest rates, post-pandemic inflationary pressures and the recent bank failures – there is little evidence of widespread financial distress. for consumers.’

Still, experts were less convinced. Chief credit analyst Matt Schulz, of LendingTree, said Fox business: “A trillion dollars in credit card debt is staggering.

“Unfortunately, it will probably only continue to grow from here. What’s driving it is inflation, higher interest rates and just generally how expensive life will be in 2023.”

Credit card debt plummeted during the pandemic as household spending was curbed by the lockdown.

Between the last quarter of 2019 and the second quarter of 2020, card balances fell from $927 billion to $817 billion — an 11 percent decline. And they fell even further to $770 billion in the first quarter of 2021.

Since then, households have been under unprecedented financial pressure thanks to rising inflation – and the Fed’s subsequent rate hikes.

In June, annual inflation cooled to 3 percent, after peaking at 9.1 percent in the same month last year.

In an effort to curb the crisis, the Fed has repeatedly raised interest rates, causing the cost of mortgages and credit card loans to soar.

The Federal Reserve raised interest rates by a quarter of a percentage point, pushing benchmark borrowing costs to the highest level in more than two decades. Fed Chairman Jerome Powell is pictured announcing the July 26 decision

Relentless rate hikes have put households under unprecedented financial pressure

In July, officials raised interest rates by a quarter of a percentage point, pushing benchmark borrowing costs to their highest level in more than two decades. The central bank took the unanimous decision to raise interest rates to between 5.25 and 5.5 percent – a range not seen since early 2001.

Data from government-backed lender Freddie Mac shows that the average interest rate on a 30-year mortgage is currently 6.9 percent — more than double what it was two years ago.

This added pressure has forced households to take extreme measures to cover their expenses.

Yesterday, a report from Bank of America revealed that the number of employees taking “hardships” from their 401(K)s rose 36 percent.

And according to the latest data from the Fed, there are 578.35 million credit card accounts in the US. It represented an increase of 5.48 million compared to the end of last year.

The average interest rate on credit card balances is also near an all-time high of 20.53 percent, he says Bank rate.