American Credit Card Debt Reaches All Time High Of $1 Trillion With Rising Delinquency
For the first time in history, credit card debts in the US hit $1 trillion, creating a record with the development of interest rates and delinquencies on the rise. Total balances on credit cards and other revolving accounts reached $1 trillion, according to reports on July 26.
Total balances on credit cards and different t revolving accounts peaked at $1 trillion in the week of July 26, which was more compared to the $998 billion of the week before. This came out on the Federal Reserve Bank of St. Louis on Friday.
This is the highest level recorded and is $193.4 billion more compared to the beginning of the year and $264 billion above the $736 billion in April 2021. This is the lowest level since the start of the pandemic.
Indebtedness increases as credit card interest rates stay at an all-time high for 40 years, with delinquencies increasing among younger borrowers. Also, millions of Americans will probably rely on credit comparatively more since the federal student loan forbearance ends this fall.
Silvio Travis, the CEO and the VantageScore president told Yahoo Finance,
“Consumers are going to have to resume their payments of federal student loans soon.”
He added,
“The problem is that if they haven’t had to pay a loan for three years, many people don’t have that money in their budget.”
According to several reports, this will cause younger people to experience delinquency or borrow more over the following year. Also, some are already struggling to keep up with their repayments while trying to be content with the rising rates, piles of debts, and ever-present inflation. The New York Fed reported that the youngest Americans had the highest credit card delinquency rates during the first quarter of 2023. The reports also showed that 8.5% of the borrowers risk slipping 90+ days behind on payment.
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