The AVERAGE American DEBT Balance is WAY UP
Ever wonder how much debt the average American carries? Brace yourself – it’s a lot!
Americans now owe a staggering $1.12 trillion on their credit cards, according to the Federal Reserve Bank of New York. The average balance? A whopping $6,218, up 8.5% from last year, says TransUnion.
Higher prices and rising interest rates are squeezing household budgets, making it tougher to keep up. As Charlie Wise from TransUnion puts it, "Consumers continue to use credit, particularly credit cards, as they navigate the world we face right now."
Why the struggle? Prices are still rising, though more slowly. The consumer price index fell from a 9.1% peak in June 2022 to 3.4% in April. Young adults, especially, are stretched thin, facing higher rents, student loans, and auto payments.
Delinquencies are up: About 8.9% of credit card balances are now delinquent, the highest since 2010, says TransUnion.
New accounts: In the fourth quarter of 2023, 19.3 million new credit accounts opened, many by subprime borrowers with credit scores below 600.
Why it matters: Credit cards carry a near-record 20.66% interest rate. If you only make minimum payments on a $6,218 balance, it'll take 18 years to pay off and cost over $9,200 in interest, warns Bankrate’s Ted Rossman. His advice? Pay more than the minimum, consider a balance transfer card, or find extra income to tackle that debt.
Keep debt in check and don’t let high-interest credit card debt weigh you down!
