(PatriotSpotlight.org) – Credit card debt has reached an alarming height over the past year, which some economic experts attribute to record-breaking inflation and interest rates.
According to data from TransUnion, the average American borrower owes more than $6,200, an average of 8.5% higher than in the spring of 2023. As a whole, Americans owe more than $1 trillion via credit card debt, an all-time high that has some economists concerned about the near future of the United States economy. Among the experts concerned about the record-breaking credit card debt is Paul Siegfried, TransUnion’s senior vice president.
According to Siegfried, American consumers struggle to manage the frequently increasing prices of goods while also dealing with interest rates. Siegfried claims that hyperinflation has left American citizens no choice but to utilize credit cards to make essential purchases despite the high interest rates attached to most credit cards. TransUnion’s data echoes statistics repeated by economists over the past few years, as many experts believe the hyperinflation of 2020 and 2021 has left American citizens incapable of affording their necessities.
TransUnion’s data highlights that most Americans have seen household expenses slowly climb over the past few years, resulting in record-breaking credit card debt. The United States economy first saw an increase in credit card debt during the international pandemic in 2020, when the consumer price index, which measures a change in consumer costs over time, reached a staggering 9.1%. The United States economy began slowly recovering after the international pandemic ended, but the consumer price index remains higher than before the pandemic started. The consumer price index isn’t the only indication of an economic downturn resulting from the pandemic, as inflation has increased by more than 18% than in the pre-pandemic United States.
TransUnion’s data comes just weeks after New York’s Federal Reserve announced that more Americans are missing credit card payments each month. According to the Federal Reserve, credit card delinquency has reached a level economists haven’t seen since 2012, when the United States was recovering from the 2008 economic recession. Despite the increase in the price of consumer goods, financial experts have cautioned Americans against using credit cards for necessities. According to some experts, using credit cards could result in more debt in the long run, especially if users make minimum payments toward their balance.
Copyright 2024, PatriotSpotlight.org
