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U.S. Credit Card Debt Hits Record High

TransUnion's credit report shows that U.S. credit card debt hit a record high of $930.6 billion in Q4 2022. The total debt rose by 18.5% from the previous year.

Credit Cards
Credit Cards

Rising Delinquencies

The rising interest rates and inflation are impacting American consumers, who are increasingly relying on credit to afford their necessities. This has caused the average credit card balance to rise to $5,805, with an annual percentage rate of 20%. Making minimum payments on this average balance would take more than 17 years to pay off and cost over $8,213 in interest.

New Credit Accounts & Delinquencies

Two hundred two million new credit accounts were opened in Q4 2022, led by Gen Z, with 518.4 million credit cards in circulation. However, there is a rise in subprime borrowers and delinquencies as more inexperienced credit users gain access to credit cards. TransUnion defines delinquency as payment overdue by 60 days or more.

Unemployment & High-Interest Credit Card Debt

As long as unemployment stays low, households can better pay their bills. However, if unemployment rises and delinquencies spike, it could indicate a longer-term problem. To tackle high-interest credit card debt, cardholders can transfer their balance to a zero percent credit card or refinance into a lower-interest personal loan. Alternatively, they can save money by side hustling, selling unused items, and cutting expenses.