American households increased their credit card debt by the end of 2023

A recent analysis presented by LendingTree anticipates before the quarterly report of the Federal Reserve Bank of New York that U.S. household credit card debt increased by the end of last year.

Although the Fed’s publication is expected this Tuesday, according to Matt Schulz, Chief Credit Analyst at LendingTree Credit Card Debt Hits New Record High surpassing the previous high of $1.08 trillion.

Inflation continues to weigh on Americans’ pockets although the economy is showing signs of recovery and stability, The costs of basic needs are pushing consumers toward spending and borrowing.

For Schulz, “I would be surprised if credit card debt did not increase in the fourth quarter, and possibly by a good amount. Because historically we have seen that the largest quarterly increases of each year have occurred in the fourth quarter“he told FOX.

The weight of interest rates

Added to this is that interest rates remain high, a measure taken by the Federal Reserve to control inflation and bring it to the 2% target. The start of a series of cuts was expected for the first Fed meeting of this year; However, the formulators warn that it is best to continue waiting for the reaction of some sectors such as the labor market.

“I’m sure inflation and rising interest rates are playing a big role.. As prices rise, many people turn to credit cards as a kind of de facto emergency fund,” Schulz said.

Credit card debt right now is particularly concerning especially with astronomical interest rates, according to data from Bankrate The credit card annual percentage rate, or APR, is at a high of 20.74%, up from 19% in 1991.

Therefore, the specialist warns that those people who go into debt to equip themselves with long-term prices will end up paying much more for the items or goods purchased.

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