According to a LendingTree report credit card debt in the United States reaches record levels amid interest rate hikes by the Federal Reserve to control inflation and bring it to its 2% target.
Since last year when inflation shot up to its highest point of 9.1% the budget of Americans have been further squeezed by the high prices of food, goods and services that reduce purchasing power and force them to borrow more, using the savings for daily expenses.
Through economic stimuli during the pandemic, the government succeeded in reducing credit card lending, this made the finances of the Americans look protected; however, these actions triggered consumption.
For Ted Rossman Senior Industry Analyst at Bankrate “high inflation is certainly contributing to high credit card balances of Americans, along with record interest rates,” he said.
In addition, a report presented last week by the Wall Street Journal indicated that in recent months the credit scores of Americans have been falling to the lowest levels prior to the pandemic and this is due to high indebtedness.
But, it’s not just credit cards that are the only debt that Americans are accumulating, according to Fed calculations, in general they owe about $1.6 trillion dollars in student debt, $1.5 trillion in auto loans and $12 trillion in home loans, that adds up to $17 trillion.
By June of this year, credit card debt reached $993 billion dollars with an average interest rate of 24.06%. Citigroup CEO Jane Fraser said this sign shows that American consumers are increasingly resilient to economic conditions.
Source: La Opinion