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Some consumers are slowly feeling the stress of more credit card debt

Americans held more than $1 trillion in combined credit card debt in the third quarter of 2023, according to the FDIC's latest report.
Some consumers are slowly feeling the stress of more credit card debt
Posted at 3:01 PM, Feb 05, 2024

Some experts are worried that certain groups of Americans are falling deeper into credit card debt.

Americans with low or middle incomes, and particularly renters, are falling behind as costs and interest rates remain high.

“The U.S. economy is currently performing better than most forecasters expected a year ago, thanks in large part to a resilient consumer," according to a recent report from TD economics. "However, more recently that spending is increasingly being financed by credit cards.”

Americans held more than $1 trillion in combined credit card debt in the third quarter of 2023, according to the FDIC's latest report. At the same time, bank credit cards carried an average interest rate of more than 21%, a record high.

"Overall, the consumer is credit healthy. However, the reality is that there are starting to be some significant signs of stress," Silvio Tavares, president and CEO of VantageScore, told The Associated Press.

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Experts say those who don't benefit from homeownership or stock market performance have felt the worst of inflation. They say delinquency rates are likely to rise going forward as well.

Synchrony Bank, which issues co-branded credit cards with retailers, reports 4.7% of customers are a month or more behind on their balances, which is an increase over the last year.

Discover says carried balances on its credit cards are up 13% in the same time frame.

Inflation is just above 3% right now, but some staples have kept the high prices that they climbed to. The Bureau of Labor Statistics says a loaf of bread is up from $1.54 in 2020 to $2.02 as of 2023, while gasoline has gone from an average of $2.17 a gallon to $3.29.

Relief is not necessarily on the horizon, either. The Federal Reserve said at the end of January that any rate cuts are still likely months away, which may delay the possibility of refinancing consumer debt to a lower rate.


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