Americans’ total credit card balance rose $45 billion in the second quarter, reaching $1 trillion for the first time ever in 2023, according to Q2 data from the New York Federal Reserve.HIGHER SHELTER AND ENERGY PRICES PROPPED UP INFLATION AT 3.7% IN SEPTEMBER
Two major factors contributed to this — one being inflation, which drove up consumer credit card debt by the billions, with a 9.1% peak in 2022. The second was the steady climb in interest rates, increasing already high debts. Bombarded with tempting offers on a daily basis, even those with high credit scores are at risk. Credit card interest rates are at an all-time high from 16% to 20% according to Bankrate. When the Federal Reserve raised interest rates, credit companies followed. With inflation making the cost of living a struggle, most Americans resorted to credit cards to cover expenses.
The most recent data from the Federal Reserve reveals that credit card debt soared to $1.03 trillion in Q2, 2023. Average debt per capita rose from $5,010 in Q1 2022 to $5,733 in Q1 2023, according to data released by TransUnion.According to a Credit Karma study, Generation X, or those born between 1965 and 1980, accrued the highest average debt of $8,134 per capita. Baby boomers came second with $6,245. Gen X also had the highest average total debt at $61,036, partly due to student loan debt.
Almost 50% of the public uses debit cards, and 32% used credit for major purchases, according to a Forbes study. Only 9% of people pay with cash.