Record number of new accounts opened amid inflation

As Americans grapple with the highest inflation in 40 years, the number of new credit card surged as more Americans rely on them to meet high prices. According to a recent Federal Reserve report, revolving credit (credit cards and lines of credit) grew 19.6% year over year to $1.103 billion.

This number is an all-time high, breaking the pre-COVID-19 record of $1.092 trillion in 2019. Credit card debt fell to $974.6 billion in 2020, but that number has steadily increased. rise as inflation began to eat more and more of Americans’ paychecks.

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New credit cards are on the rise

According to an Equifax poll, Americans received 11.5 million new credit card until February 2022. This is an increase of 31.4% over the previous year. The total limits for these credit cards were $55.5 billion, an increase of 59.2% over the previous year. Total credit limits now stand at $4.12 trillion, $224 billion above the pre-pandemic level.

Credit card balances fell by $15 billion according to the Federal Reserve’s quarterly report on household debt and credit. This is common as people pay down their credit cards starting around the holiday season. However, that’s $71 billion more than the first-quarter 2021 sales, which is a big year-over-year increase.

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Mortgage and auto loan balances push up total household debt

Household debt at the end of the first quarter of 2022 increased by $266 billion, or 1.7% more than in the previous quarter. Total household debt reached $15.84 trillion, $1.7 trillion more than at the end of 2019, just before the pandemic. Mortgages increased by $250 billion and auto loans by $11 billion.

While mortgage and auto loan balances increased, the number of new loans declined in the first quarter of 2022. New mortgage loans, including refinance loans, reached 859 billion dollars. That’s still $197 billion more than the quarter just before the pandemic hit. Data shows that Americans are using their credit cards more and taking out fewer mortgages as they need to borrow more due to high inflationand react to rising interest rates.

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Mortgages are by far the largest component of household debt at 71%. The second-largest component of household debt is student loans, which stood at $1.59 trillion, up $14 billion from the previous quarter. Fed report shows consumers relying more on credit cards as high inflation dramatically increased the cost of everything food and gas under cover. Americans are taking on less mortgage and auto loan debt as the Fed raised interest rates to the highest since 2009.

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