Americans see high cost of living, acquiring higher credit card debt – Boston, Massachusetts

Boston, Massachusetts 2022-08-06 16:55:20 –

NEW YORK CITY, NY: Americans are struggling to meet the high cost of living, and credit card debt is rising, according to a New York Federal Reserve report released this week.

U.S. household debt topped $16 trillion for the first time in the second quarter of this year, according to the Federal Reserve Bank of New York, and credit card balances rose $46 billion last quarter, despite soaring borrowing costs.

Over the past year, credit card debt has grown 13% to reach $100 billion. This is his biggest increase in over 20 years.

The New York Fed said the credit card overheating is partly a reflection of the fact that prices are rising at the fastest pace in more than 40 years, saying, “The impact of inflation is showing up in massive borrowing. ” he pointed out.

The Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point last week for the second month in a row, but as it aggressively raises borrowing costs, high inflation is also driving up credit card debt. added.

The Bureau of Labor Statistics said last week that high inflation is forcing consumers to save less, with the personal savings rate dropping to 5.1% in June, the lowest since August 2009. rice field.

But the New York Fed said consumer balance sheets overall appeared to be in a “strong position” despite rising debt levels, adding: “Debt stocks are rising rapidly, but , households in general have weathered the pandemic very well.”

But a growing number of low-income and subprime borrowers now appear to be struggling to keep up with the bills.

“Some borrowers are starting to show some pain in debt, largely due to supportive policies in past pandemics,” the report said.

But credit reports show an increase of 11,000 new foreclosures in the second quarter, and may be “starting to return to more typical levels,” the New York Fed added.

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