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SINCE KAMALA HARRIS' LAST PRESS CONFERENCE

Credit card debt at its highest level in 20 years

The sharp increase in prices causes "an increase in delinquencies among high-risk and low-income borrowers."

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Published by
Verónica Silveri Pazos

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A report from the Federal Reserve Bank of New York reveals that credit card balances (limits) increased by $46 billion over the last year, making it the second largest source of overall global debt in the last quarter.

The 13% cumulative increase in credit card balances since the second quarter of 2021 represents the largest increase in more than 20 years. In June, ZeroHedge reported that "consumer credit, particularly revolving credit, was skyrocketing" as consumers stifled by rising inflation relied on credit cards to make ends meet.

"There is an increase in delinquencies."

Credit limits added to accounts increased by $100 billion in the last quarter. Joelle Scally, administrator of the New York Fed's Microeconomic Data Center, said the large increase in prices causes an increase in delinquencies:

The second quarter of 2022 showed strong increases in mortgage, auto loan and credit card balances, driven in part by rising prices. Although household balance sheets generally appear to be in a strong position, we are seeing an increase in delinquencies among subprime and low-income borrowers, with rates approaching pre-pandemic levels.

A survey from CreditCards.com assured that 60% of credit card debtors have maintained the same level and type of debt for at least one year. This is 50% more than in 2021. Meanwhile, those who maintain the debt for more than two years have increased by 40%. That is, more consumers are holding onto their debt for longer periods of time with debt on their cards.

ZeroHedge points to inflation and rising interest rates as the culprits for the crisis affecting household finances.

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