More Americans are accumulating credit card debt as inflation drives up the cost of food, utilities and other basic commodities.
According to a new report from CreditCards.com, 60% of credit card holders have had balances on their cards for at least a year, a 10% increase from 2021.
“It’s even harder to get out of debt when it comes to spending that put you in that position,” said Ted Rossman, senior analyst at Creditcards.com. “These costs are not easy to avoid.”
The report found that 59% of Americans who earn less than $50,000 a year have a monthly credit card balance. The percentage drops slightly to 49% for those earning between $50,000 and $80,000 and drops back to 46% for those earning $80,000 to $100,000 per year.
CreditCards.com’s report is based on an online survey of 1,834 cardholders conducted last month. Cardholders also reported accumulating debt as they had to pay unexpected expenses, such as medical bills or home and car repairs.
Although inflation cooled in July and August, consumer prices have risen, with rising costs of groceries, shelter and medical care offsetting a recent drop in gasoline prices. Core inflation, which excludes volatile food and fuel prices, rose 6.3% in August from 5.9% a month earlier.
As of June 2022, Americans had $887 billion in credit card debt, according to the Federal Reserve Bank of New York. That’s an increase of about 13% from the same time last year, “which is the biggest increase in credit card debt we’ve seen in more than 20 years,” Ron Hetrick, senior economist at Lightcast, told CBS News last month.
Credit card debts pile up 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 more on their new credit card,” Matt Schulz, credit analyst at LendingTree, said in an email.