Americans have accumulated a record-breaking $1 trillion in credit card debt.
This comes as the Federal Reserve’s interest rate hikes have caused average interest rates for credit cards to spike to more than 22%. Rates on retail credit cards are even higher, nearing 29% on average.
“Even if you’re working and your wages are up, your rent costs more, your groceries cost more, your gas costs more, everything costs more,” said Tedd Rossman, senior industry analyst at Bankrate.com. “So people don’t feel like they’re getting ahead.”
Despite rising costs and higher borrowing rates, a record number of consumers shopped over the Thanksgiving holiday weekend. The National Retail Federation found that more than 200 million consumers hit the stores that weekend, a few more million than the 196.7 million shoppers who turned out in 2022.
However, big box retailers like Macy’s and Nordstrom have issued warnings about a slowdown in repayments on their credit cards over the summer, highlighting a potential risk to retail revenue this holiday season. The resilience of the American consumer will continue to be tested by the still-rising costs of groceries, gas and housing. And, not to mention, the return of student debt payments.
Watch the video above to find out more about how Americans’ credit card debt ballooned past the $1 trillion threshold, and whether U.S. consumers can keep spending enough to keep a looming recession at bay.
Chapters:
0:00 Introduction
1:11 Ch 1. $1 trillion dollar credit card bill
2:45 Ch. 2. Holiday spending
4:04 Ch. 3. What’s next?
Produced and Edited by: DeLon Thornton
Reporting by: Paulina Likos and Melissa Repko
Supervising Producer: Jeff Morganteen
Additional Footage: Getty Images
» Subscribe to CNBC:
» Subscribe to CNBC TV:
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Connect with CNBC News Online
Get the latest news:
Follow CNBC on LinkedIn:
Follow CNBC News on Facebook:
Follow CNBC News on Twitter:
Follow CNBC News on Instagram:
#CNBC
How America Racked Up A $1 Trillion Credit Card Bill…(read more)
BREAKING: Recession News
LEARN MORE ABOUT: Bank Failures
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
It’s no secret that America loves to spend money. From luxury cars to designer clothes, Americans are known for their love of consumerism. But with this consumerism comes a hefty price tag, especially when it comes to credit card debt. According to recent reports, America has racked up a massive $1 trillion credit card bill, and the number is only continuing to grow.
So, how did America get into this predicament? There are a few factors at play. For one, the ease of obtaining credit cards has contributed to the problem. In today’s world, it’s incredibly easy to sign up for a credit card and start swiping away without much thought. With tempting rewards and cash back incentives, it’s no wonder that many Americans are lured into the trap of overspending.
Additionally, the high cost of living in many parts of the country has also contributed to the credit card debt crisis. In order to keep up with the rising costs of housing, healthcare, and education, many Americans have turned to credit cards to bridge the gap. This has resulted in a cycle of debt that is hard to break free from.
Another factor is the lack of financial literacy in America. Many people simply do not have a good understanding of credit and how it works. This has led to irresponsible spending habits and a lack of understanding about the consequences of carrying a high balance on a credit card.
The COVID-19 pandemic has also played a role in the increase in credit card debt. With many people losing their jobs or experiencing a reduction in income, turning to credit cards to make ends meet has become a necessity for some.
So, what can be done to address this issue? It starts with financial education. Teaching people about the dangers of credit card debt and how to manage their finances responsibly is crucial. Additionally, implementing stricter regulations on credit card companies to prevent predatory lending practices is essential. And of course, encouraging a culture of saving and responsible spending is key to preventing this issue from growing even further.
Ultimately, America’s $1 trillion credit card bill is a concerning and unsustainable situation. It’s time for individuals, financial institutions, and policymakers to come together to address this issue and work towards a more financially responsible future. By addressing the root causes of this problem and promoting financial literacy, we can hopefully start to chip away at this massive debt and prevent it from growing even larger.
Thank God for his faithfulness. You and your family are blessed.
Car payment s. Credit card payments. And people complain.
Good old Bidenomics why where we are at….
I have an idea for people out there. How about don’t spend money that you don’t have! People lack financial education!
I have never paid $1 in interest. Never….
Is so simple… Do not spend more than what you earn…
Cars keep people broke. By design. Car payments have been meticulously structured by the industry to keep you naive of the amount of interest and fees you are shelling out year over year. 96 month car loans? Give me a break!
Best to live within your means & budget your money. Many people living to impress each other which is causing them to sink deeper & deeper in debt .
Can the government bail us out of this credit card debt?
Welcome to Brandon's America
Welcome to BIDENFLATION
Welcome to Brandon's BORDER CRISIS
TRUMP 2024….TRUMP 2028
Dave Ramsey will always have a job it seems.
I don't understand why people spend more money than they have, especially when it comes to consumer goods
Those ridiculous rates used to be called usury and were illegal. I hope the new bill capping interest payments passes.
Send the lobbyists home.
I'd. 721026-07-5845-03-01-A2428033-sn:D100379C0B-data investing global economy personal play store flattom us bank trading industry market asset property bank account -5196-0321-3333-3068-(13491-p) climb bank berhad Malaysia -kwsp -epf asset global account-11704584-accout-2-accout-1-mydebit visa paywave -bsn account cart-4059-9860-5238-0575-854-BCARD-6298433073330491-Redzuan bin hamed 85 jalan mukin 17 kapung kubur 11100 batu ferringhi pulau pinang malaysia
the problem is, is it banking corpos care with debt? no!
Needs VS Wants . I want what I don't need – NOW ! I didn't work for it and can't pay for it ! What an I missing here ? The interest rates are poison .
Clearly the ease with which money is lent and the extent credit is overused by people is leading–in part–to the inflation we are seeing. Prices for cars won't drop because people are willing to pay 8%API and $15k over MSRP for 72 months for a truck they don't need. They can put their purchases in payment plans or simply use their credit cards. The banks don't care if they ever see the balances paid off because they can squeeze people for a few years and make back the initial loan with just the interest accruing, then they can sell your debt to collection agencies to get that double dip. I'm making double the median income at 25 and I can't responsibly afford a car that isn't over 5 years old in the current market. It's ridiculous how people are so ignorant on interest. No wonder people don't have $1000 for an emergency, I can't imagine what their retirements are gonna look like.
Apparently all these "college educated" consumers never were taught how to manage their money.
I’m squared up on my debt idk
1: Corporate Price Gouging
2: people not being paid enough to have savings to pay for things in full
Honestly… 29% should be illegal.
25% max.
You’ve got to differentiate between balances that are paid off monthly, and balances that are carried into the next month and beyond.
Are shoppers planning to spend more or yes likely forced to sue to inflation. Let’s not fool everyone because we all know how broke everyone already is due to gas food and heat this past year.
Give me a break, Biden be spending multiple trillions like it’s peanuts.
2 Trillion.
Biden should pay off everyones credit card for Christmas
Resilient in more debt.
Racking up credit card debt is so stupid, I can't imagine why people do it. It's basically a decision to pay more than necessary for things.
Having credit card and being in control of them is a different thing. I have all the major band cc and only two of them have a low balance rest are paid of any will only use if I really need it.
It can be fairly misleading to include balances which don't accrue any interest when talking about the credit card debt in the country.
Whenever youtuber posted economy video. Bunch of "financial advisor" bots started their fake conversation.
This piece should have broken down the 1 trillion into revolving debt and debt that is paid off monthly. That would give a clearer picture of the true consumer debt burden. My wife and I purchase nearly everything with credit cards. We also pay off our entire credit card debt each month. Debt like ours, that doesn't include interest on it and is paid off each month is quite different from revolving debt that incurs interest each month and may even increase month to month. In the future please include all their pertinent data so your views can understand the entire picture, not simply a part of it.