US Credit Card Balances Are Up 23% From Their Pandemic Lows – How Much More Interest Are You Paying

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The steep decline in credit card debt that began during the COVID-19 pandemic is officially over, as credit card balances in the United States are now where they were before the pandemic.

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Total U.S. card balances hit $916 billion in September 2022 — almost identical to where they were in December 2019, according to a new report from credit rating agency Equifax. Balances have risen 9% year to date and are up roughly 23% from their pandemic low in April 2021, the Wall Street Journal reported.

Equifax’s U.S. National Consumer Credit Trends Report, released on Oct. 17, found that total U.S. consumer debt was $16.43 trillion in September, up 8.4% from a year earlier. Mortgage debt, including home equity loans, accounted for 72.8% of total debt. The rest came from auto loans and leases, student loans, and credit card balances.

The recent spike in credit card spending runs in stark contrast to what happened during the pandemic, which slowed discretionary spending to a near standstill. As reported by GOBankingRates, the average credit card balance was around $700 less in 2020 than in 2019. Purchasing volume fell for all of the major credit card companies, and many Americans used stimulus checks to pay down existing balances.

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Those days appear long gone. Outstanding balances on bankcards in September 2022 rose 18.1% year-over-year to $851.4 billion, Experian said in its report. The number of outstanding bankcard accounts pushed above 515 million for the month, up 8% from the prior year. The severe delinquency rate climbed to 1.80% from 1.32% a year earlier.

“After the COVID-19 national disaster declaration in April 2020, overall card utilization declined to historically low levels with slight seasonal fluctuations,” Experian noted. “In September 2022, average bankcard utilization stood at 19.94%.”

One reason Americans are borrowing heavily this year is to keep up with decades-high inflation on basics such as food, gas and housing, the Washington Post reported. Data from the Federal Reserve Bank of New York show that credit card debt is rising at its fastest rate in more than two decades.

Credit card users are also getting hit with higher borrowing costs amid a move by the Federal Reserve to hike interest rates to ease inflation. As the WaPo noted, average credit card rates recently inched close to 19% — the highest rate in 30 years.

This is all happening during a period of economic uncertainty that includes the looming threat of a recession, which might lead to a rise in unemployment.

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“The worry is what’s going to happen two years from now if people aren’t able to pay down this debt,” Mary Eschelbach Hansen, an economics professor at American University, told the WaPo. “Bankruptcy filings were very low during the pandemic but there is a real concern that could change, which has the potential to be a really serious problem.”

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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