Nearly half of all credit card users are carrying a balance from month to month, up from 40% just three years ago, according to data released by Bankrate, indicating the impact that high inflation has had on consumers who have been forced to turn to credit to help make ends meet during the past few years.
- There is an interesting divergence when it comes to credit card usage and how much debt is being carried, according to the research. While more members of Generation X are carrying balances over from month-to-month than other generations, members of Generation X are the least likely generation to be using cards in the first place.
By The Numbers: Forty-three percent of consumers cite unexpected costs like medical bills (11%), car (10%) and home repairs (9%) as the primary drivers pushing them to use credit cards and go into debt.
- Necessities like groceries and utilities account for 26% of the debt reasons.
- Nearly one in four consumers feel overwhelmed by their debt, 10% are unsure how to reduce it, and 16% fear missing minimum payments in the next six months.
- While 47% have a repayment plan, 10% see no end to their debt, and 26% expect repayment to take over five years.
The Silver Lining: Despite rising debts, credit card delinquencies remain relatively low at 2.98%.
- Stable Debt-to-Income Ratios: According to the Fed, Americans maintain low debt-to-income ratios, even amidst higher costs and interest rates.
The Last Word: “Over the past two years, Americans’ credit card balances have skyrocketed 40 percent, according to the New York Fed,” says Bankrate senior industry analyst Ted Rossman. “And most cardholders’ rates have risen five-and-a-quarter percentage points during that span as a result of the Fed’s rate hikes meant to combat inflation. It’s no wonder, then, that we’re seeing more people carrying more debt for longer periods of time.”
