The Federal Reserve just announced that our nation has hit an all-time high in credit card debt at $930 billion.
Considering there are 331 million people in the country (and about 75% of us are adults), that means that the average American adult owes $3,750 in credit card debt.
This chart doesn't show the current quarter, but you can see how, with this figure, we're surpassing the previous high of $927 from the 4th quarter of 2019.
To make matters worse, credit card interest rates are increasing as well. The current APR for new accounts is 20.16% - up 3-4% from the 16-17% range that it was in from between 2018 to 2021, and up 7% from 10 years ago.
To pay off the new average debt of $3,750 with these new rates, you'd need to pay somewhere in the range of $350 per month to get the debt paid off in 1 year, or $140 per month to get it paid off in 3 years.
But that's not the whole story. The household savings rate has hit a new low (at least since the 60s) of only 3.5% of income.
And savings accounts have dipped from to an average of $2,532 per U.S. adult, the lowest amount since 2009 and about 1/10th of what they were during the pandemic (as a result of all the stimulus checks).
We're seeing a serious and concerning inversion in people's personal finances and, from someone who had to pay off $8,000 in credit card debt about 10 years ago, these things tend to snowball - as credit card debt increases, the path of least resistance is for it to continue to increase.
And when the average American is also seeing a decline in personal savings, well, that only makes matters worse.
What do you think is at fault? Inflation? Unnecessary stimulus checks negatively impacting our personal finance discipline? Something else? All of the above?
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