Record-Setting Debt Suggests Americans Are Struggling Financially

Folks in the U.S. have had more and more trouble making ends meet. At least, that’s what the latest credit card data seems to suggest, as Americans tallied a dramatic credit card debt increase last year. While it may not surprise those tracking the country’s financial health, the numbers are still staggering.

In 2022 alone, American consumers charged more than $180 billion worth of receipts. This is the largest single-year credit card debt increase in U.S. history. More importantly, $86 billion of that amount–nearly 50%–was added in just the fourth quarter of 2022. That is the biggest quarterly credit card debt increase in history as well. This jump helped bring the national household credit card debt average up to $9,900, nearly 10% higher than the same quarter the year prior.

At first glance, the credit debt numbers are concerning, but it is shocking that it also follows one of the most prolific savings periods in history. Indeed, Americans had established quite a bit of saving during the pandemic, but it seems that has not deterred anyone from using plastic.

Of course, the issue is not simply that Americans have been spending more freely in the post-pandemic economy. Skyrocketing inflation has complicated many budgets over the past few years. And even though more people are returning to work, compensation has not kept pace with inflation, and many are living paycheck-to-paycheck. That is often a precursor to increased credit card use.

In this case, heavier reliance on credit cards is less about lavish spending and more about covering daily expenses. After all, food is more expensive than housing costs and fuel. With the cost of basic goods rising–and, again, payrolls failing to follow suit–many are just one emergency expense away from bankruptcy.

On top of all this, credit card interest rates are also rising. That means not only are people using credit to cover basic living expenses, but they are paying more for it in the long run. Indeed, the average interest rate grew to 20.4% in the first week of March, also a new record.