(RepublicanNews.org) – President Joe Biden is at the helm of an economy that is forcing record numbers of Americans to pay their bills with credit cards. Consumers are continuing to increase their balances despite the fact that household budgets will be squeezed even further if the Federal Reserve raises interest rates as expected later this year.
According to data from the New York Fed, nearly $1 trillion in debt was held on plastic at the end of 2022. Between quarters three and four of last year, the number jumped by $61 billion. It was the largest quarterly jump since the Fed began monitoring consumer debt in 1999.
Following the stimulus payouts from the U.S. government during the pandemic, outstanding card balance totals fell dramatically. From March 2020 to April 2021, card loans dropped from $858 billion to $736 billion. Since the April 2021 low, the totals have climbed at record paces.
In an effort to tame runaway inflation, the Federal Reserve employed a series of successive interest rate hikes. A side effect of their effort led to increased borrowing costs. According to one report, the average interest rate on a credit card as of July 10th is 24.06%.
A recent estimate from WalletHub says the average U.S. household carries about $10,000 in combined debt on one or more cards. Another report said the issue of high-interest debt is embarrassing enough that as many as one in three consumers hides the amount they owe from friends and family.
Major lenders are uniformly saying that consumers should have no fear. Jane Fraser, Citigroup CEO, said “alarm bells” are not being heard and that the “U.S. consumer” is “largely resilient.” Jamie Dimon of JPMorgan Chase said, “The consumer is in good shape.”
In June, the U.S. national debt surpassed $32 trillion. In the nine months prior, interest payments alone totaled $652 billion.
As interest rates and the cost of living continue to rise, the American consumer is relying ever more heavily on credit cards to keep them afloat. As consumers take on more debt, not only will the economy take a significant hit, the American dream will drift further and further out of reach for more Americans.
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