US credit card debt increases by $51 billion, hits $1.09 trillion.

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The financial landscape grows increasingly precarious, with recent data revealing a surge in US credit card debt by $51 billion over the past year, reaching an all-time high of $1.09 trillion. This dramatic rise underscores a troubling trend that stretches back over the past four years, with total credit card debt climbing by $344 billion. Compounding this issue is the alarming average interest rate on this debt, now hitting 22%, close to the highest levels on record.

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The burden of credit card debt has grown increasingly heavy for the average American household. Rising interest rates mean higher monthly payments, which can strain already tight budgets. Consumers are feeling the pinch as the cost of borrowing escalates, impacting their ability to manage everyday expenses.

Recent data also shows that a record number of consumers are making only the minimum payments on their credit card bills, which often leads to a vicious cycle of mounting debt due to accumulating interest. Delinquency rates are also ticking up, signaling potential financial distress for many households. As these trends unfold, they are painting a sobering picture of consumer debt in the United States.

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One cannot help but wonder: are we on the brink of a larger financial crisis?

Sources:

https://fred.stlouisfed.org/series/DRCCLACBS

https://www.newsweek.com/credit-card-defaults-skyrocket-americans-unable-pay-their-debts-2007843

https://www.cnbc.com/2024/11/13/credit-card-debt-hits-record-1point17-trillion-new-york-fed-finds

https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm

h/t IAmNotAnEconomist


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