More U.S. consumers are saddled with credit card debt for longer periods of time, struggling to repay amid high inflation and rising interest rates, according to a survey.
Sixty percent of credit card debtors report being in credit card debt for at least a year, up from 50% a year ago. CreditCards.com said Monday in a report. The share of those who have been in debt for more than two years has also increased, from 32% to 40%, according to the online credit card market.
With inflation outpacing wage gains, more households resorted to revolving debt. Consumers in their 20s and 30s, and those in the lowest income brackets, are more likely to have a balance to cover day-to-day expenses such as groceries, childcare or utilities than generations. older, according to the report.
Although total credit card balances remain slightly lower than before the pandemic, high inflation for decades has weighed on the precarious finances of many American households.
About a quarter of respondents said daily expenses are the main reason they have a balance. Nearly half cite an emergency or unexpected expense, including medical bills and home or car repairs.
The Federal Reserve is expected to raise interest rates for the fifth time this year next week. Credit card rates are generally directly linked to the Fed Funds rate, and their increase, coupled with a slowing economy, can lead to increased delinquencies.
Total consumer debt rose $23.8 billion in July to a record $4.64 trillion, according to Federal Reserve data.
The Fed figures include credit card debt, student loans and auto loans, but exclude mortgage debt. Revolving credit fell sharply at the start of the pandemic when business and business restrictions limited spending opportunities, but rebounded to an all-time high when consumers started spending again.
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