U.S. credit-card debt is nearing a record high of $1 trillion as Americans battle high inflation costs and card companies continue fighting for customers.
- U.S. credit-card debt reached a record high of $986 billion in the fourth quarter of 2022, according to the latest consumer debt data from the Federal Reserve Bank of New York.
- The debt has increased $61 billion from $925 billion in the third quarter of 2022, making it the most significant increase since the Fed began tracking it in 1999.
- Americans carried a balance on 53% of all active credit card accounts in the second quarter of 2022, according to data from the American Bankers Association.
- Debt is expected to continue increasing and surpass $1 trillion by the end of 2023.
Why it’s news
Credit-card debt in the U.S. has skyrocketed as Americans continue to spend despite prices steadily being increased by inflation.
U.S. credit card debt reached a record high of $986 billion, with the Fed expecting the number to pass $1 trillion by the end of the year.
Despite debt reaching a record high, card companies offer many perks and incentives to bring in new customers. They offer travel points, cash-back bonuses, and heavy discounts when new customers open a card.
Businesses are also offering discounts, free shipping, and other incentives when opening a credit card attached to the company, which is also helping drive up debt numbers.
Many businesses are collaborating with credit card companies to offer branded cards with incentives, but the cards typically have large interest rates which are only beneficial to the small number of people who pay their card balance in full each month.
Americans are continuing to spend large amounts of money despite high inflation and consumers unable to keep up with the high prices.