Amid ongoing uncertainty in the country’s economy, U.S. credit card debt has reached an all-time high of $1.14 trillion. This figure was announced by the Federal Reserve Bank of New York on Tuesday and shows how worrying it is for American citizens to resort to credit.
The number has been trending upward for some time. In fact, it is currently $27 billion higher than it will be in the second quarter of 2024. With employment data sparking panic about an impending recession in the US, concerns about an economic downturn persist.
Also read: US debt limit hits $35 trillion. What does this mean for the US dollar?
US credit card debt reaches record high – a worrying development
Since the beginning of the year, the financial sector has been concerned about the rising US national debt. The ceiling recently reached a record high of $35 trillion and federal spending is designed to prevent an impending crisis. Now the focus is on the American people, whose debts have also reached record levels.
According to new data, credit card debt in the U.S. has reached an all-time high of $1.14 trillion. Moreover, a report from TransUnion finds that this equates to a balance of more than $6,300 per person. That represents an 8% increase from last year, the data states.
Also read: Notable US billionaires raise concerns about rising US debt numbers
In addition, a May report from the Urban Institute shows that 60% of adults use a credit card to buy groceries. The results show the impact inflation is having on the average consumer. The risks of recession in the US have only exacerbated the problem.
Rising credit card debt is accompanied by increased delinquency rates. Data shows that more than 7% of credit card holders fell behind on their payments in the second quarter. Compared to the beginning of the year, this figure is up 5%.
In an effort to combat inflation, the Federal Reserve has kept interest rates at a 23-year high. But this inaction sparked panic in the face of troubling July labor market data. As a result, $2 trillion was wiped out of the U.S. stock market on Monday as panic took over the market. The average citizen has little choice but to hope for a soft landing.
