Americans are racking up credit card debt at historic levels as they battle soaring inflation.
Credit card balances rose 15% in the third quarter from a year ago, according to the Federal Reserve Bank of New York, marking the biggest jump in more than 20 years.
“With prices more than 8% higher than they were a year ago, it’s perhaps unsurprising that sales are on the rise,” Fed economists said in the report. “Notably, credit card balances have grown at nearly double that rate since last year.”
Total credit card debt reached $930 billion in the third quarter.
Paying off that debt is harder right now, CNBC reported:
Meanwhile, “high inflation and high interest rates are making it harder than ever to pay off credit card debt,” said Ted Rossman, senior industry analyst for CreditCards.com.
Not only have credit card balances returned to pre-pandemic levels, but consumers are also carrying balances for long periods of time.
Among Americans who have month-to-month credit card debt, 60% have had credit card debt for at least a year, according to CreditCards.com.
As the Federal Reserve raises its target federal funds rate, credit card annual percentage rates are also rising.
The news comes as credit card interest rates hit record highs: the current rate of 19.04% is the highest rate recorded by financial services firm Bankrate since started tracking in 1985.