WASHINGTON–Two new reports offer insights, respectively, into credit card debt being held by consumers and what Fed rate increases will mean to the amount of debt held.
The reports were both released by WalletHub, including its Credit Card Debt Study, which found consumers paid down $13.2 billion in credit card debt during Q1 2022 (76% less than last year), and its Fed Rate Hike Report, which revealed the interest rate increase on June 15 will cost people with credit card debt an extra $3.2 billion in the next year alone.
The reports also show in which cities in the U.S. consumers are being most and least affected by the changes.
According to WalletHub, key findings in the Credit Card Debt Study include:
- Debt Reduction. Consumers paid off $13.2 billion in credit card debt during Q1 2022, which is 76% less than the same period last year.
- Higher Average Household. The average household credit card balance was $8,425 in Q1 2022, 11.9% higher than in Q1 2021.
- Average Annual Increase. The average annual increase in credit card debt over the past 10 years is just $49.7 billion.
- Best Balance Transfer Credit Cards. The best balance transfer credit cards currently offer 0% APRs for the first 15-21 months with no annual fee and low balance transfer fees.
Fed Rate Hike Survey Key Findings
- More Costly Debt. A Federal Reserve interest rate increase on June 15 would cost people with credit card debt an extra $3.2 billion in the next year alone. That’s on top of the $4.9 billion increase already caused by the Fed’s previous rates hikes this year.
- Consumers Not Happy About Rate Hikes. 72 million Americans are upset about the Fed raising interest rates.
- Inflation Concerns. 89% of Americans are concerned about inflation right now.
- Heading for a Recession. 8 in 10 Americans think we are heading into a recession.
- More Worry Over Inflation Than High Rates. 76% of Americans are more worried about high inflation than high interest rates.
- People Spending Less Due to Rate Increases. About 1 in 2 people (49%) want to spend less money due to this year's Fed rate increases.
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