Credit card debt crosses $1 Trillion, US economy under pressure as cost-of-living soars

With the cost-of-living soaring, economists have expressed concerns over the credit card debt burden on the average American. Experts feel it may hit hard those people who live from pay cheques to pay cheques.

Credit Card Debt Crosses $1 Trillion

‘Quarterly Report on Household Debt and Credit’, prepared by the Federal Reserve of New York, shows that credit card debt has increased by $45 billion and touched $1.03 Trillion.

Credit Card Debt to Hit US Economy Hard

The experts point out that people generally don’t use credit cards for frivolous buying, they use them to pay bills for essential expenses like gas and food items. Increasing credit card debt means people in general are under heavy burden of debts for buying essential items and it indicates that they are under economic duress.

More People Under Credit Card Debt Burden

According to Bankrate.com, almost 50 per cent of people carry credit card debt from month to month, it was 39 per cent a year before. It has also been found that more and more people fail to make their credit card payments on time.

Federal Reserve Raises Interest Rate

Federal Reserve increased the bank interest rate by 25 basis points last Wednesday to keep inflation under control, but credit card users must pay more interest on their credit card debts. This may further deteriorate their financial condition and they may end up doing two or three jobs at a time. Some of them may become bankrupt in the end.

Average Credit Card Debt is $5,733

Trans Union has said that the national average for credit card debt is $5,733, but they must pay 24.69 per cent of interest on this amount. It is also important that a high debt burden may reduce growth and the average people of working-class group trying somehow to meet both ends meet may find it more difficult.

FAQs:

Q1. When and how much the interest rate was increased last?
A1. The US Federal Reserve increased the bank interest rate by 25 basis points last Wednesday.

Q2. What is the national average credit card debt?
A2. According to Trans Union, the average credit card debt is $7.533.