By Arlenys Tabare
08 Nov 2023, 15:54 PM EST
According to a report published this Tuesday by the New York Federal Reserve, total credit card debt in the United States has reached a new record by the end of September.
Due to the high cost of prices for basic goods and services, Americans are increasingly turning to their credit cards to cover their essential expenses.
In this regard, Donghoon Lee, an economist at the New York Federal Reserve, said that “credit card balances experienced a big jump in the third quarter, consistent with strong consumer spending and real GDP growth”, said.
In a three-month period from July to September, the general debt increased to $1.08 trillion dollars, that is, 4.6% compared to the previous quarter. This last figure represents an increase of $48 billion dollars.
On the other hand, the report revealed that this year there are more borrowers having difficulty paying their credit card debts. “It could be that some stress is building up, that people are losing jobs, income, there could be real financial stress, perhaps due to high inflation,” the analysts highlighted.
Last year, inflation reached the highest levels causing the Federal Reserve to take some measures such as raising interest rates to the highest levels in more than 20 years this put pressure on some sectors of the economy.
The APR increase
As a result, for example, The APR was at 20.72% in its last report last week This has been the highest average annual percentage rate for credit cards, with 19% in 1991 as a reference, according to Bankrate data.
Although inflation continues to show signs of cooling to 3.7%, it still remains above the Fed’s objectives of 2% and it is expected that the central bank, despite the last three pauses, will decide by the end of this year to increase rates. of interest.
Latinos are also in debt
According to a survey carried out by AARP, a non-profit organization, more than 50% of Latino seniors in the US are in debt. In the research, some 7,387 adults over 50 years of age from all states in the country were surveyed, of which 1,642 of Hispanic origin participated.
Gilberto Cabrera, external relations advisor for AARP, said that during the survey “Latinos in the United States said their debt level was a serious problem for them, since they spend half of their income paying debts monthly.”
This situation is due to several factors, such as job loss, health problems and inflation in the prices of essential goods. For that reason, The specialist recommended starting to prioritize financial education and discipline over your income and stick to a budget that allows you to live within your means and helps you save for retirement.
Keep reading: