MIAMI–Americans racked up a record $180.3 billion in new debt during 2022 and with the Federal Reserve expected to boost interest rates again later this month, it will cost those carrying card debt more than $3 billion, according to a pair of studies. The research found nearly half of Americans saying they feel stress from card debt.
The findings were released as part of WalletHub’s Credit Card Debt Study and its Fed Rate Hike Report.
According to WalletHub, that record $180.3 billion in credit card debt last year compares to an average annual increase in credit card debt over the past 12 years of just $47.8 billion.
The company said credit card debt rose by $85.8 billion during Q4 2022 – the biggest quarterly increase recorded to date. The average household credit card balance was $9,990 at the end of 2022, $2,015 below WalletHub’s projected breaking point for household finances.
Those developments are being announced at the same time NCUA has flagged rising credit card delinquencies as one of its areas of concern.
Key Findings
Among the key findings in the newest Credit Card Debt Study:
- More Debt in 2023. 56% of people say they have more credit card debt than they did 12 months ago.
- Worries Over Cost of Debt. 66% of Americans are worried about the cost of their credit card debt increasing due to interest rate hikes by the Federal Reserve.
- Long Road to Repayment. 57% of people with credit card debt say it will take them more than a year to pay it off (a 21% increase from 2022).
- Bad Spending Habits. More than a quarter of Americans admit they’d go into credit card debt for frivolous spending.
- Personal Finances Managed Better Than Government. 85% of Americans say their personal finances are managed better than the federal government.
- Debt Stress. 45% of people say credit card debt makes them feel stressed.
- Desperate for Relief. More than 1 in 3 Americans with credit card debt say they would do anything to be debt-free.
- Looking for Lower Rates. 83% of Americans say they will try to lower the interest rate on their credit card debt in 2023.
Fed Rate Hike Survey Key Findings
WalletHub said key findings from its Fed Rate Hike Survey include:
- Tired of Rate Hikes. Nearly three in four Americans are fed up with hearing about the Fed.
- Feeling the Pain Already. Eight in 10 people say their wallets have been affected by the Fed increasing interest rates this year.
- Excellently Prepared. Three and a half times more people with excellent credit are financially prepared for a recession than people with subprime credit.
- Recession ‘Round the Corner. 73% of Americans think a recession is inevitable.
- Not Ready for a Recession. Compared to January, 20% more Americans are not financially prepared for a recession.
- Fed Confusion. More than one in three people do not understand why the Fed raises interest rates.
- Jobs at Risk. One in four people say their job is at risk if the Fed continues to raise interest rates.
For additional info: Fed Rate Hike Survey.
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