According to WalletHub’s Credit Card Debt Study, American consumers accumulated a staggering $180.3 billion in new credit card debt during 2022, the largest increase in a single year on record. The study also revealed that the expected interest rate hike by the Federal Reserve on March 22 will cost people with credit card debt an extra $3.4 billion over the next 12 months.
WalletHub’s study breaks down the cities with the smallest and biggest increases in credit card debt, with Lewiston, ME, and Casper, WY, having the smallest increases, and Santa Clarita, CA, and San Bernardino, CA, with the largest increases. The average annual increase in credit card debt over the past 12 years has been $47.8 billion, but the Q4 2022 increase of $85.8 billion is the largest quarterly increase recorded to date.
“The latest credit card debt statistics tell us that U.S. consumers are on a dangerous trajectory. We racked up a record $180.3 billion in credit card debt during 2022, so it’s no surprise that 56% of people say they have more credit card debt than they did 12 months ago, according to a new WalletHub survey, and 57% of people with credit card debt say it will take more than a year to pay off,” said Jill Gonzalez, WalletHub analyst. “It’s not just financial health we have to worry about. WalletHub’s survey found that 45% of people say credit card debt makes them feel stressed, and more than 1 in 3 Americans with credit card debt say they would do anything to be debt-free. Let’s hope that includes buckling down and paying off debt this year.”
The study also found that the average household credit card balance was $9,990 at the end of 2022, $2,015 below WalletHub’s projected breaking point for household finances. With the expected interest rate hike, WalletHub recommends that consumers explore balance transfer credit cards that offer 0% APRs for the first 12-21 months with no annual fee and low balance transfer fees.
“Most people seem resigned to the inevitability of a recession, but that hasn’t prompted much urgent preparation. Roughly 73% of people think a recession is inevitable, according to a new WalletHub survey, but the number of Americans who say they’re financially prepared for a recession has gone down by 20% since January,” said Jill Gonzalez, WalletHub analyst. “Those most at risk appear the least prepared. WalletHub’s survey found that 3.5X more people with excellent credit are financially prepared for a recession than people with subprime credit.”
WalletHub’s Credit Card Debt Survey, which surveyed Americans’ attitudes and behaviors towards credit card debt, revealed that 56% of people have more credit card debt than they did 12 months ago. Additionally, 66% of Americans are concerned about the cost of their credit card debt increasing due to the interest rate hikes by the Federal Reserve.
The survey also found that 57% of people with credit card debt say it will take more than a year to pay it off, a 21% increase from 2022. More than a quarter of Americans admit they would go into credit card debt for frivolous spending, and 45% of people say credit card debt makes them feel stressed. Furthermore, more than 1 in 3 Americans with credit card debt say they would do anything to be debt-free, and 83% of Americans say they will try to lower the interest rate on their credit card debt in 2023.
In addition to the Credit Card Debt Study, WalletHub’s Fed Rate Hike Report found that nearly 3 in 4 Americans are fed up with hearing about the Federal Reserve. Eight in 10 people say their wallets have already been affected by the Fed increasing interest rates this year, and 73% of Americans believe a recession is inevitable. The report also found that 1 in 4 people say their job is at risk if the Fed continues to raise interest rates.
Despite the concerns highlighted in the study and survey, 85% of Americans say their personal finances are managed better than the federal government. Furthermore, WalletHub recommends that consumers take steps to manage their credit card debt, such as making a budget and paying more than the minimum payment.
“Markets suggest that the Fed will raise its target rate by at least 100 basis points from March through the end of the year, with the bulk of the increase coming by the summer,” said Jill Gonzalez, WalletHub analyst. “The potential for end-of-year decreases in the Fed rate has dwindled over the past few months.”
Overall, the findings of WalletHub’s Credit Card Debt Study and Fed Rate Hike Report provide important insights into the current state of Americans’ finances and the impact of economic policies on their wallets.
The findings of WalletHub’s Credit Card Debt Study and Fed Rate Hike Report shed light on the concerns and challenges faced by Americans in managing their personal finances. The study and survey results suggest that despite economic growth and improvements in employment, many Americans are struggling with credit card debt and are worried about the impact of interest rate hikes by the Federal Reserve.
While some cities have experienced smaller increases in credit card debt, many others have seen significant increases, highlighting the need for consumers to be mindful of their spending and to take steps to manage their credit card debt. WalletHub recommends exploring balance transfer credit cards that offer 0% APRs for the first 12-21 months with no annual fee and low balance transfer fees, as well as making a budget and paying more than the minimum payment.
As the Federal Reserve continues to monitor economic conditions and adjust interest rates accordingly, Americans should be prepared for the potential impact on their wallets. WalletHub’s Fed Rate Hike Report found that many Americans are already feeling the pain of rate hikes and are concerned about the possibility of a recession. To manage their finances effectively, Americans should stay informed about economic policies and take steps to prepare for potential financial challenges.
