Average Credit Card Debt Witnesses its Largest Increase Since 1999
The average household credit card debt grew by 13% in the second quarter of 2022. Per a report that was published by the Federal Reserve Bank of New York on August 30, 2022, this debt increase was the largest of its kind since 1999.
This is a sign of consumers’ increased reliance on credit to pay for basic bills against an inflationary backdrop.
From 2021 to 2022, credit card balances ballooned by $46 billion. Credit card debt is the second largest source of total debt of the last quarter.
According to financial advice website Bankrate, the current credit card interest rate is at a record level of 17.96%.
Bryan Jung of The Epoch Times observed that “Total American household debt rose by $312 billion from the second quarter of 2021 for a total of $16.15 trillion at the end of June 2022.”
Jung added that this is a 2% increase “from the year-ago quarter” that was principally driven by a hike in “mortgage rates, and car loan and credit card balance.” Joelle Scally, a New York Fed analyst, cited the 40-year high inflation rate as the principal factor driving these surges in loan rates.
Thus far, the Fed is trying to fight inflation by hiking interest rates.
However, there are hard limits to such contractionary policies. These rate hikes could generate a recession.
“The second quarter of 2022 showed robust increases in mortgage, auto loan, and credit card balances, driven in part by rising prices,” observed Scally.
Household debt balances are roughly $2 trillion greater than they were towards the end of 2019, right before the outbreak of the Wuhan virus pandemic.
Mortgage balances have been on the uptick as well. These balance increases have largely propelled the debt increase. For example, mortgage balances grew by $207 billion and reached a total of $11.39 trillion.
Due to the rising mortgage balance, 35,000 people are facing new foreclosures on their credit reports, which marks a 45% increase from the preceding quarter.
In a similar vein, auto loans went upward by $33 billion, to a total of $199 billion.
There’s a clear economic crisis unfolding in America. And the American people are looking for answers. Republicans must be willing to provide solutions, not half-measures, to these problems. That means promoting cryptocurrencies and other competing monetary standards to undermine central banking, downsizing the regulatory state, promoting productive infrastructure investment, and prudentially using tariffs to protect strategic industries in America.
As BLP has previously mentioned, tax cuts to major corporations who hate Middle America aren’t going to cut it any longer. The American people deserve more bold reforms that hurt their political enemies and free from the shackles of the managerial state.