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The startling state of credit card debt

On Behalf of | Mar 12, 2023 | Credit Card Debt

Data from the Federal Reserve Bank of New York reveals that American citizens are coming perilously close to a trillion dollars in credit card debt at the end of 2022. If plastic use were a mountain, it would be the highest since the famed Fed began tracking it in 1999 when credit card debt was $480 billion.

The number also represents a $61 billion increase from $925 billion in the previous quarter, the largest growth in the report’s history. The trajectory from the end of 2021, balances blew up to $13 billion, $59 billion more than the previous record at the same time in 2019 with $927 billion.

Add to that rising interest rates, ongoing inflation, and other factors, one trillion in debt may be inevitable.

Ballooning balances

When the pandemic started in 2020, balances significantly decreased from 927 billion at the end of 2019 to $770 billion in the initial quarter of 2021. By the fourth quarter, credit card debt started the spike that continues today.

  • When looking at unpaid balances, bank, and retail credit cards averaged $7,279.
  • Balances nationwide come in at 53% of active account balances druing the second quarter of 2022
  • LendingTree reported that 35 percent of cardholders pay their balance in full every month, while 65 percent carry a balance
  • Data from the American Bankers Association data revealed 53 percent of all active accounts carried a balance in the second quarter of 2022

Interest rate trends

Average interest rates play a role in the surge in credit card debt. On average, the APR for all credit cards at the end of 2022 was 19.07 percent. Specific states reveal:

  • Current cards – 19.07 percent
  • Interest-accruing accounts – 20.4 percent
  • Cards accruing interest average – 20.40 percent during the same time
  • New offers average – 23.5 percent, another number that is the highest since the tracking of rates monthly in 2019

Debts that become too large to manage may require a look into bankruptcy relief. Years of stress over mounting past-due bills come to an end through Chapter 7 and 13 proceedings.

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