US deep in debt, owing banks $1 trillion in credit cards
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Americans fall deeper into the economic crisis amid a soaring inflation and debt crisis.
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In this July 18, 2012 file photo, credit logos are seen on a downtown storefront as a pedestrian passes in Atlanta. (AP)
Average Americans have plunged into dire economic straits due to an unprecedented level of debt that added to their economic hardships amid soaring inflation. In a report by The Hill on Tuesday, an average US household now carries $10,000 in credit card debt, raising the US credit card balance to $1 trillion.
With a 24 percent average interest rate on a new credit card and monthly payments of $250, this will push households until 2030 to pay off their debt, while spending up to $20,318, twice what was owed.
According to the Federal Reserve, the US credit card debt stands at $986 billion, showing an increase of $250 billion in two years. Other sources calculate a higher debt.
WalletHub reported $1.2 trillion at the end of 2022. “In 2021, we saw people paying off a record amount of debt,” WalletHub's senior analysis, Jill Gonzalez, said, adding, “People had been saving through 2020, without much to do.”
Read next: US inflation surging, retired becoming homeless
A new survey conducted by the United States' central bank shows that the country's record high inflation has eroded the sense of financial security among US households. The COVID-19 pandemic reached its peak as a global pandemic in 2020, forcing the government to limit people's movement in cities and countries around the globe.
That said, movement restrictions were gradually removed and spending picked up, and saving slowed down. Simultaneously, the US Federal Reserve commenced an unprecedented campaign of interest rate hikes, amid a soaring inflation rate.
Credit card debt rose by $86 billion during the fourth quarter of 2022, indicating the largest increase on record. Overall, one-third of US households consider inflation as their current financial challenge, demonstrating an increase of more than 400 percent from 2016.
