For Americans who lacked savings prior to the pandemic, financial stress is rising
For Americans who lacked savings prior to the pandemic, financial stress is rising. A combination of inflation, increased interest rates, and the end of pandemic-tied relief, such as the moratorium on student loan payments, has led to record credit card debt, experts say.
In the third quarter of 2023, Americans held more than $1.05 trillion on their credit cards, and the average interest rate on a given credit card is now roughly 21.5%, the highest it’s been since the Federal Reserve started tracking rates in 1994. A recent report from credit rating company Moody’s found credit card delinquencies are now well above 2019, or pre-pandemic levels.
Silvio Tavares, president and CEO of VantageScore, one of the country’s two major credit scoring systems, said, “the reality is that there are starting to be some significant signs of stress,” despite consumers generally being in good financial health.
If you’re facing increased credit card debt, while feeling the ongoing effects of inflation, here’s what to consider:
One of the first things you should do is ask your credit card company to lower your rates.
While the Federal Reserve signaled Wednesday that its first interest rate cut is likely months away, the average credit card interest rate is already far and away higher than the rate set by the Fed. Most companies offer promotional rates and ways to move your balances to low or zero-interest cards, at least for the first year.
