Average Consumer Carries $6,329 in Credit Card Debt
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By Lee Barney From Newsmax
The average American is carrying $6,329 in revolving credit card debt, 4.8% more than a year ago, a TransUnion report Thursday shows.
Those high balances are taking a toll. In the past year, 9.1% of credit card balances became delinquent, according to a Federal Reserve Bank of New York report earlier this week.
In total, Americans owe $1.14 trillion on their credit cards.
Inflated prices have prompted people to “max out their credit cards,” says Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “That’s usually a pretty good indicator that people are stretched.”
Total household debt rose by $109 billion, or 0.6%, in the second quarter to $17.80 trillion, according to the New York Fed report. It is now $3.7 trillion, or 26%, higher than the $14.1 trillion in U.S. household debt at the end of 2019, just before the pandemic.
“Credit card balances briefly fell in 2020 and early 2021 due to pandemic-related factors,” Ted Rossman, senior industry analyst at Bankrate, tells CNBC. Those factors included COVID stimulus checks from the U.S. government and people spending less while in pandemic lockdown.
“But since early 2021, credit card balances have rocketed upward by 48% — fueled by a post-pandemic boom in services spending as well as high inflation and high interest rates,” Rossman says.
When the pandemic subsided in late 2021, early 2022, people decided to embrace travel and work opportunities that they could not have pursued during the pandemic, according to a recent Bankrate report.
Flexible and work-from-home schedules that became the norm for many knowledge-based workers also enabled them to move to new regions of the country.
People are now tamping back on the so-called “revenge spending” of the past several years, Raneri says.
Since the average credit card charges an all-time high interest rate of 20%, or even more, “it’s more important than ever to pay down this debt as soon as possible,” Rossman says.
Two alternatives Rossman suggests are: 1) find a credit card with an interest-free balance transfer, typically only available for a limited period of time, or 2) pay off the balance with a low-interest personal loan.
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