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Swiping Our Way to Struggle: US Credit Card Debt Soars
Published On: June 25th, 2024
Americans are drowning in debt, and credit cards are a significant part of the problem. A recent study by WalletHub found that the average household in Santa Clarita, California, carries a staggering $21,836 in credit card debt.
This isn’t an isolated case. Across the country, credit card debt is on the rise, driven by factors such as rising interest rates, persistent inflation, and the end of pandemic relief programs. This mounting credit card debt adds another layer to the already heavy burden of personal debt facing Americans, including high mortgage and student loan debts.
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Facts at a Glance
- National Credit Card Debt: $1.12 trillion (Federal Reserve)
- Average Credit Card Debt per Borrower: $6,218 (TransUnion)
- Average APR for Credit Cards: 24.80% (LendingTree)
- Cities with Highest Average Credit Card Debt:
- Santa Clarita, CA: $21,836
- Chula Vista, CA: $20,920
- New York, NY: $19,207
- Top Factors Contributing to Rising Debt:
- Rising interest rates
- Persistent inflation
- End of pandemic relief programs
What Came Before
Credit card debt has been a persistent issue in the US, often exacerbated by economic downturns and policy changes. The 2008 financial crisis led to a surge in personal debt, prompting tighter credit regulations. However, the pandemic temporarily alleviated some of these pressures through stimulus packages and relief efforts. As these measures ended, the underlying financial challenges resurfaced, with rising interest rates and inflation further straining household budgets.
The Current Situation
Recent studies indicate a sharp increase in credit card debt, particularly in urban areas with high living costs. Four of the top five cities with the highest household credit card debt are in California, reflecting both higher credit limits and significant financial struggles. Inflation and high-interest rates have made it difficult for many Americans to manage their debt, pushing delinquency rates higher.
Renters and younger individuals are particularly vulnerable, struggling to keep up with rising living expenses and credit card payments. The Federal Reserve reports that national credit card debt has reached $1.12 trillion, with the average debt per borrower rising to $6,218. The average APR for cards with balances is now 24.80%, making it more expensive for consumers to carry a balance.
Tips for Consumers
The outlook for credit card debt remains challenging if current economic conditions persist. You may need to seek the assistance of a debt relief company to help you get out of your financial struggles. That said, there are steps that you can take to manage your debt effectively:
- Negotiate with credit card companies: Contact your credit card issuer to discuss lower interest rates or alternative payment plans.
- Adopt a budgeting strategy: Use available budgeting tools to track and control your spending.
- Consider debt consolidation: Explore options like balance transfer credit cards or personal loans to consolidate high-interest debt into a single, more manageable payment.
- Build an emergency fund: Slowly start setting aside money to cover unexpected expenses, reducing reliance on credit cards.
- Seek professional help: Consult credit counseling services for personalized advice and support.
The Bottom Line
The rising credit card debt in the US is a significant concern, reflecting broader economic challenges. As interest rates and inflation continue to impact household budgets, consumers must take proactive steps to manage their finances. Debt relief services and credit repair efforts can provide valuable assistance in navigating these financial difficulties, helping you work towards greater financial stability.