The Federal Reserve Bank of New York released data this week indicating that American credit card debt has reached a new high of $1.14 trillion. A separate report from TransUnion has found that the average American is carrying $6,329 in personal credit card debt, a 4.8% uptick from last year.
The vice president of TransUnion reported that more borrowers are maxing out their credit cards. Delinquencies have risen 9.1% in the past year as borrowers are unable to pay. Credit card balances overall have risen 48% since 2021 and shows no signs of slowing. Balances overall rose $27 billion from Q2 and 7.18% of credit card debt was marked “seriously delinquent” or over 90 days past due during this time.
Consumers are pulling back on spending simply because they cannot afford to do so. Now this leads to lower revenues for businesses who are likely dealing with their own debt. We must also realize that the banks will always expect to be repaid and major institutions just reported a combined loss of $4,139,000,000. The banks are less likely to simply write off debt and expect a bail out. They will first come after all secured forms of debt and resort to legal measures such as wage garnishment.
Now, this only discusses credit card debt. Household debt rose to $17.987 during Q1 of 2024 and has not waned. This problem is worldwide as countless nations now have household debt that exceeds GDP. As we face looming wars that guarantee a rise in prices, the personal debt crisis will inevitably come to a head as consumers turn into savers at best or debtors at worst.