With inflation straining people’s budgets and raising concerns of a prolonged recession, American consumers are once again adding new credit card debt by the billions.
Consumers racked up more than $67 billion in the second quarter of this year, according to WalletHub’s latest credit card debt study. They also predict that consumers will add a total of $110 billion in debt in 2022.
The new debt is also expected to become even more expensive, with the Federal Reserve expected to raise its target rate by 75 basis points on September 21.
Michigan is ranked 12th.
States with the highest increase in debt States with the lowest increase in debt
Credit Card Debt Study Key Statistics
Record the Q2 increase. Credit card debt increased by nearly $67.1 billion during the second quarter of 2022, an all-time high for the second quarter of the year.
Accumulation greater than normal. The increase in consumer credit card debt in the second quarter of 2022 was 3.5 times greater than the post-Great Recession average for a second quarter.
Record annual projection. WalletHub predicts consumers will end the year with about $110 billion more in credit card debt than they started, which would be near a yearly high.
Key Findings from the Fed Rate Hike Survey
More expensive debt. A Federal Reserve interest rate hike on Sept. 21 would cost people with credit card debt an additional $5.3 billion in the next year alone. This is on top of the $15.3 billion increase already caused by previous Fed rate hikes this year.
Inflation Concerns: 85% of Americans are currently concerned about inflation.
Fed increases affecting portfolios: 63% of respondents say their portfolio has been affected by Fed rate hikes this year.
Monthly spending affected: 62% of respondents say inflation has affected their monthly grocery spending the most, followed by gas (32%) and housing (6%).
Government intervention at the pump: 71% of people think the government should cap gas prices.
Not ready for recession: 44% of respondents do not think they are financially ready for a recession.
High inflation is better than high unemployment: 56% of Americans say they would prefer high inflation to high unemployment.
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