Americans are about to pass two milestones: $1 Trillion in Credit Card Debt and 22% interest on that debt.
Consumers are finding themselves in a difficult spot. The on-going inflation has meant that they have to use their credit card to make up for any short fall. Often they have no alternative, after all we all have to pay for food and shelter.
So we find ourselves in the unfortunate situation of having to use those credit cards, even though we know the card’s interest charges are rising. The latest report on Revolving Credit (primarily credit card) shows the total debt for these tiny pieces of plastic is just under a trillion dollars. We will no doubt pass that milestone sometime this month (July, 2023).
But what makes this all the more painful, the interest rate charged by the average credit card has not risen to 22%. A level we haven’t seen in years. This follows the interest rate hike of the Federal Reserve.
Bottom line: banks, brokers, credit unions and other financial institutions are seeing windfall interest income of $220 Billion.
That’ll put a dent in the economy.
Credit Card Debt (blue, left scale). Credit Card Interest (red, right scale)
