(FreePressBeacon.com) – In a staggering proof that Americans are still suffering from the effects of Bidenomics, the spike in credit card debt in America is becoming a ticking time bomb, threatening both individual financial health and broader economic stability.
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As more citizens resort to making only the minimum payments, the nation finds itself at a crucial crossroads.
According to the Philadelphia Federal Reserve Bank, revolving credit card balances have skyrocketed to $645 billion, constituting 71% of total credit card debt.
The report highlights a 12-year high in accounts that are only making minimum payments, reaching 10.75% in Q3 2024.
This troubling trend reflects consumer financial stress, exacerbated by high interest rates and stagnant wages.
Recent data also reveals an increasing delinquency rate of 3.52% for credit card balances overdue by 30+ days, although still below the 6.8% peak during the 2008-09 financial crisis.
Despite these alarming statistics, consumer spending remained strong, with a 2.9% increase adjusted for inflation in November.
However, experts suggest this growth may decelerate in 2025.
High interest rates, averaging 21.5%, discourage refinancing and have increased the cost of carrying balances.
Rising living costs have pushed many Americans to rely more on credit cards, with holiday spending adding significantly to consumer debt.
“With higher prices, people are going to turn to credit cards more to use for necessities. You tack on higher interest rates and then you have more difficulty getting by. If they’re only making the minimum payment, you can go very quickly from getting by to drowning,” said Elizabeth Renter, senior economist at personal finance company NerdWallet, cited by CNBC.
Banks are reacting by tightening lending standards, resulting in fewer new card originations and stricter credit conditions.
At the same time, mortgage origination remains low due to prohibitive interest rates, a stark contrast to the highs seen in Q3 2021.
A NerdWallet survey revealed that 48% of respondents use credit cards for essential purchases, and 22% make only minimum payments.
This financial behavior signals a potential for further economic strain as interest rates and debt pressures compound.
Economists warn that these trends may not only impact individual livelihoods but also pose risks to the larger financial system.
Policymakers must address these challenges to safeguard economic stability and consumer financial health.
The Philadelphia Federal Reserve’s findings are a wakeup call for America.
Rising debt and minimum payments may be symptomatic of deeper systemic issues that need urgent attention.
The share of active credit card holders just making minimum payments rose to 10.75% in the third quarter of 2024, the highest ever in data going back to 2012 https://t.co/4iNyZ2zD2T
— Lorie Konish (@LorieKonish) January 22, 2025
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