U.S. Household Debt Reaches Record High of Nearly $17 Trillion
By In the fourth quarter of 2022, the New York Federal Reserve Bank reported that household debt in the United States had hit an all-time high of $16.9 trillion, with credit card debt added on totaling $989 billion.[0] This borrowing represents the largest quarterly increase in 20 years, and has led to a new record high of nearly one trillion dollars, ($986 billion) in credit card debt nationwide.[1]
According to a Bankrate survey that took place from January 20 to January 23, more than a third of U.S. adults, 36%, reported that their credit card debt is higher than their emergency savings — a record high over the 12 years the poll has been conducted. Nearly half of respondents, 49%, said they have either less money in emergency savings or none at all compared to a year ago.[2]
Wilbert van der Klaauw, economic research adviser at the New York Fed, commented on the situation, “Although historically low unemployment has kept consumer’s financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts.”
Making matters worse, the average credit card rate is at an all-time high, meaning that individuals are paying far more in interest and possibly ending up in further debt. Mark Hamrick, Bankrate senior economic analyst, noted that the less-than-optimal economy has taken a double-edged toll on Americans, many of whom are tapping their emergency savings or relying on credit cards to make ends meet.[3]
Fortunately, some of the best balance transfer credit cards offer 0 percent APRs for up to 18 or even 21 months, meaning cardholders can chip away at their debt without owing a dime in interest for nearly two years.[4] Those with good credit scores are offered the option of paying zero interest for 12-18 months; however, caution should be taken.[5] Fees are likely to be incurred.[5] If you do not pay off the full amount during the zero-interest period, the rate of interest may increase to 28% or higher.[5]
Overall, the data reveals a worrying trend in US household debt. Although unemployment is low, the high inflation and interest rates are making it increasingly difficult for Americans to pay back their loans. With the average credit card rate at an all-time high, many are turning to balance transfer credit cards to help them pay down their debt.
0. “Nation's Household Debt at $16.9 Trillion – The Presidential Prayer Team” The Presidential Prayer Team, 20 Feb. 2023, https://www.presidentialprayerteam.org/2023/02/20/nations-household-debt-at-16-9-trillion/
1. “Total Household Debt Charts Biggest Rise in 20 Years” SchiffGold, 20 Feb. 2023, https://schiffgold.com/key-gold-news/total-household-debt-charts-biggest-rise-in-20-years/
2. “As emergency savings drop and credit card debt rises, an ‘ugly stew is brewing,' warns advocate” CNBC, 24 Feb. 2023, https://www.cnbc.com/2023/02/24/consumers-at-risk-as-emergency-savings-drop-credit-card-debt-rises-.html
3. “Americans are saving less and being buried in credit card debt” Yahoo! Voices, 23 Feb. 2023, https://www.yahoo.com/now/americans-saving-less-being-buried-171400034.html
4. “Average credit card debt in the U.S.” Yahoo! Voices, 23 Feb. 2023, https://www.yahoo.com/now/average-credit-card-debt-u-120048090.html
5. “Terry Savage: What to do if you've fallen back into debt” Orlando Sentinel, 22 Feb. 2023, https://www.orlandosentinel.com/business/os-bz-terry-savage-column-02-26-2023-20230222-nofuf7wtsfd3jcxgpholplg57a-story.html
