The Federal Reserve Bank of New York tracks these things. It says from April through June of this year Americans significantly increased their credit card debt. In the second quarter balances on credit cards rose $46 billion. That’s a 5.5% jump from the first quarter.
A news release from the Fed bank says inflation is to blame. “Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices,” the news release said.
Consumer spending — says the Bureau of Economic Analysis — rose 1.1% in June. Gas prices in June were up to over $5 per gallon in most parts of the country. Inflation hit 9.1% year-over-year in June.
That’s why — the New York Fed says — we’re using our credit cards more, and why new credit card account applications rose to the highest number since 2008. In the second quarter, 233 million new requests for credit cards were filed. That’s a 13% rise over 2021.
Total credit card debt hit $890 billion in the second quarter and that’s a $100 billion rise over the second quarter of 2021.
The same report also looked at household debt. It rose in the second quarter by $312 billion. That’s 2% over the first quarter. Total balances for credit cards are now $2 trillion higher than they were before the pandemic hit a couple of years ago.
Fortunately, the Fed says so far delinquency rates are low.
Joelle Scally is the administrator of the Center for Microeconomic Data at the New York Fed at homes and autos She said mortgage interest rates saw the biggest increase in inflationary terms and auto loan rates aren’t far being. Balances for auto loans rose $33 billion in the second quarter.
“The second quarter of 2022 showed robust increases in mortgage, auto loan, and credit card balances, driven in part by rising prices,” Scally said. “While household balance sheets overall appear to be in a strong position, we are seeing rising delinquencies among subprime and low-income borrowers with rates approaching pre-pandemic levels.”
Source link: The Washington Post — https://wapo.st/3QdMwPh
Credit Card Debt Rising — Inflation Pegged as Cause
About PIA Western Alliance
The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.
PIA WESTERN ALLIANCE VALUES OUR STERLING PARTNERS