More Americans are racking up credit card debt as inflation pushes up the cost of food, utilities and other staples.
According to a new report from CreditCards.com, 60% of credit card holders have been carrying balances on their cards for at least a year, up 10% from 2021.
“It’s even harder to get out of debt when it’s spending on necessities that got you into that position in the first place,” said Ted Rossman, senior analyst at Creditcards.com. “These expenses aren’t easily avoided.”
The report shows that 59% of Americans who earn less than $50,000 a year carry a credit card balance from month to month. The percentage drops slightly to 49% for those who earn between $50,000 and $80,000 and dips again to 46% for people making $80,000 to $100,000 a year.
The CreditCards.com report is based on an online survey of 1,834 card holders conducted last month. Card holders also reported piling on debt because they had to pay unexpected costs like medical bills or home and car repairs.
Although inflation cooled in July and August, consumer prices have surged, with the rising cost of groceries, shelter and medical care offsetting a recent decline in gasoline prices. Core inflation, which excludes volatile food and fuel prices, rose 6.3% in August, up from 5.9% the previous month.
Americans owed $887 billion in credit card debt as of June 2022, according to the Federal Reserve Bank of New York. That’s an increase of roughly 13% from the same time last year, “which is the largest increase in credit card debt that we’ve seen in over 20 years,” Ron Hetrick, senior economist at Lightcast, told CBS News last month.
Credit card debt is accumulating as the cost of plastic rises. The average interest rate for a new credit card is between 18% and 25%, according to LendingTree.
“Even people with the best credit (score) can expect to pay 18% interest or higher on their new credit card,” Matt Schulz, credit analyst with LendingTree, said in an email.