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Credit card debt in the United States surpasses $1 trillion

On Behalf of | Feb 13, 2024 | Bankruptcy |

Consumers in Maryland and around the country are sinking deeper and deeper into credit card debt according to a report released on Feb. 11 by the Federal Reserve Bank of New York. At the end of 2018, American consumers had $873 billion in revolving debt. By the final quarter of 2019, that figure had risen to $930 billion. Even more worrying is the speed at which credit card balances are increasing. Consumers added $46 billion in credit card debt during the fourth quarter of 2019 alone.

Financial stress

Revolving debt increases during times of financial stress when people use their credit cards to pay for necessities like food and utilities. Credit card balances peaked at $870 billion in 2008 during the last financial crisis, but that figure has now been surpassed. Credit card debt reached a new high of $1.13 trillion in the fourth quarter of 2023, and interest rates hikes have increased the average credit card APR to 21%. If consumers make only minimum monthly payments, clearing their credit card debt would take decades.

Rising delinquency rates

The Federal Reserve Bank of New York report also reveals that credit card delinquency rates are on the rise. Credit card accounts are considered delinquent when payments are not made for 90 days. Delinquency rates rose by 0.16% to 5.32% during the fourth quarter of 2019, and young borrowers are finding the current financial climate particularly difficult. The delinquency rate among borrowers 70 years of age or older is 4.26%. Among borrowers between the ages of 18 and 29, the credit card delinquency rate is 9.36%. When credit card debt becomes overwhelming, consumers often turn to personal bankruptcy to escape unmanageable financial situations.

A fresh financial start

Revolving debt balances and credit card delinquency rates are rising, which suggests that many Americans are struggling to make ends meet. A Chapter 7 or Chapter 13 bankruptcy allows consumers to put their financial problems behind them and gives them the opportunity to make a fresh start. Filing a bankruptcy also puts an end to harassment from credit card companies and other debt collectors.