‘You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter, don't you call me 'cause I can't go
I owe my soul to the company store’
Tennessee Ernie Ford
“US credit card debt inched close to a trillion dollars in the fourth quarter of 2022, the New York Federal Reserve Bank said in its quarterly report on household debt, released on Thursday.
According to the data, Americans’ credit card balances jumped by $61 billion to $986 billion in the last three months of the year, a record high in the entire history of its observation since 1999.
Total household debt exceeded $16.9 trillion. Authorities attribute the growth to stubbornly high consumer prices, strong consumer spending and repeated key interest-rate hikes, which pushed credit card interest rates to nearly 20%.
Bank customers were also seen delaying loan payments more frequently, which, according to New York Fed researchers, is “worrying.”
The current credit card balance figure is a major reversal from two years ago when US consumers were paying off their debts using stimulus money they received during Covid-19 lockdowns and lowering their overall expenses, such as vacations, because of the pandemic. That led to a decline in credit card balances, which dropped to $770 billion in early 2021 compared to $890 billion in the same period a year earlier.
Overall, US credit card debt soared by $130 billion last year, the biggest annual growth on record. Analysts expect the Federal Reserve to pass several more rate hikes this year, pushing credit card borrowing costs higher.
“It’s triple trouble for credit card borrowers. Balances are up, rates are up and more people are carrying credit card debt,” Ted Rossman from Bankrate analytics firm told Bloomberg, noting that the number of credit card holders carrying debt jumped to 46% last year from 39% the year before that.
The previous credit card debt record of $927 billion was set by US consumers in the fourth quarter of 2019.”