Charged Up: Americans' Credit Card Debt Growing

Inflation is not only raising prices and interest rates, it's pushing Americans deeper into debt. The latest survey from CreditCards.com finds 72% of credit card holders have increased their balance over the past year. This follows a recent survey showing the number of Americans carrying a monthly credit card balance has grown.

Not surprisingly, nearly three-quarters of those who took on more credit card debt blamed higher prices or higher interest rates. "This is really triple trouble for credit card borrowers," says Ted Rossman, senior analyst for CreditCards.com. "We have record high rates, we have more people carrying debt, and those balances are higher."

The survey shows the debt crunch is affecting younger people and those in lower income brackets the most. More than 80% of millennials and Gen Z have added to their credit card debt in the last year, and 75% of those making less than $50,000 annually have added to their debt. "But even among people with six-figure incomes, about 40 percent are carrying credit card debt from month-to-month," says Rossman. "So it's not exclusively a low-income problem."

Rossman tells KTRH this trend is a complete reversal of what we initially saw coming out of the pandemic, when people were flush with free government stimulus money and interest rates were zero. "There was a time in early 2021 when credit card balances had fallen 17 percent from their pre-pandemic peak," he says. "But now we've climbed right back to the old record, and I think we'll probably go zooming past it after the Fed's next interest rate hike."

While recent numbers show the rate of inflation is slowing a bit, it is expected to continue for the foreseeable future. And with the average credit card interest rate now just above 20%, Rossman recommends finding other options to avoid ballooning your debt. "You've got to prioritize that interest rate, and try to get out of debt as soon as you can, and as cheaply as you can," he says. "And worry about things like rewards and miles later on."