Credit Card Debt Tops $1 Trillion
1. Record Levels: Credit card balances have reached $1.03 trillion in the second quarter, a 4.6% increase from the preceding three months, says the Fed Bank of New York. 📊
2. Delinquency Rates: The most significant worsening in debt performance was seen in credit card balances, following a period of low delinquency during the pandemic. 😟
3. Good Payment History: Americans have generally been paying credit card bills on time despite higher interest rates and inflation.
However, this may change with student loan payments re-starting in October. 🎓💸
4. Long-Term Debt: 60% of those carrying a balance have been in debt for at least a year. Even high-income households are keeping debt, with 72% of those earning $100,000 or more in debt for over a year. 🏠💰
5. Causes and Considerations: Emergency expenses are the main cause of debt, but higher-income groups also cite vacation and entertainment.
Credit can offer advantages like reward points and consumer protections but has downsides like high interest rates and potential credit history damage. 🚨🏖️💳
6. Strategies and Advice: Consider balance transfers to zero percent promotional rates and review your interest being charged on credit cards.
7. Looking Ahead: With credit card debt becoming more expensive, consumers are striving to reduce their balances.
The situation may not get cheaper soon. 📉🔮
Martin and Chelsea Matthews