Credit cards are typically reserved for financial emergencies. But rising living costs are putting Americans in a constant state of panic, and it’s driving them into deep debt.
The Federal Reserve Bank of New York said U.S. consumer credit card debt has risen to nearly $1 trillion, and it’s poised to keep climbing.
ABC News reported that credit card balances increased more than $60 billion over the three months ending in December, bringing the national total average ot $986 billion.
Wilbert van der Klaauw, an economic research adviser at the New York Fed, said: “Although historically low unemployment has kept consumer’s financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts.”
Basic necessities like groceries, gas and rent prices have been forcing Americans to make tough financial choices.
As previously reported by ESSENCE, in November, food saw 10.6% price increase across the board, with costs rising 12% and eatery menus seeing an uptick of 8.5% according to the Bureau of Labor Statistics said Tuesday. General inflation now sits at 7.1%.
To put things into context, food items like eggs cost nearly $7 per carton on average, whereas last year they were half the price. According to CNN, “food prices are affected by a number of factors, including extreme weather, diseases impacting crops and livestock, supply chain complications and geopolitical unrest including the war in Ukraine. That makes it more difficult for the US government to use tactics like raising interest rates to moderate food prices.”
Overall, total household debt increased over the last three months of 2022, jumping 2.4% to nearly $17 trillion, the New York Fed found, as reported by ABC News.
There’s an average individual credit card balance of $5,805 by cardholders which is a notable 11% increase from the previous year according to TransUnion.
“A lot of people may not have enough income coming in to support day-to-day expenses, so it lands on the credit card,” Ted Rossman, a senior analyst at Bankrate.com told ABC News. “That becomes a very persistent cycle of debt, unfortunately.”