Credit Card Debt Hit Record-High $1.3 Trillion In October As Inflation Squeezes Household Budgets
U.S. credit card debt hit an all-time high in October.
Investopedia reports credit card debt in the U.S. has hit a record high of $1.3 trillion, even though the $2.9 billion in debt that was added in October was the smallest rise since credit card debt declined in June.
Credit card debt is the fourth-highest debt Americans carry after mortgage debt, home equity debt, and auto loans. According to Wells Fargo, U.S. credit card debt has grown at a rate seven times higher than it did between the end of the Great Recession and the beginning of the COVID-19 pandemic, suggesting that many Americans have no choice but to charge it to pay expenses that have risen significantly due to the pandemic and inflation.
“The run-up in revolving debt over the past few years may indeed reflect a devil-may-care attitude on the part of some consumers, but it is also simply a function of inflation that has flared up in ways that haven’t been seen in decades,” economists Tim Quinlan and Shannon Seery Grein said, according to Investopedia. “When your expenses are growing faster than your paycheck, credit cards are not an indulgence, they’re a lifeline.”
In addition to inflation, online spending has grown significantly. According to a CNBC report, Black Friday shoppers spent a record $9.8 billion in U.S. online sales, a 7.5% rise from 2022. That trend will likely continue as more people shop from home as opposed to going to brick-and-mortar stores.
According to a separate report by the Federal Reserve, a growing number of Americans, especially those under 40, are falling behind on their credit card payments. Rising credit card debt isn’t scaring economists at this point because it coincides with a growth in salaries and workers are still in high demand, boosting consumer spending and debunking almost two years of recession predictions.