New data published Thursday by TransUnion shows the average debt per borrower hit $6,218 at the end of the first quarter, an 8.5% increase from one year ago.
Americans are racking up more credit card debt as they continue to battle high inflation and interest rates. Consumers owe a collective $1.02 trillion in credit card debt. "As consumers manage expenses amidst stubbornly high inflation, demand for credit continues to be strong despite the currently relatively high interest rates," said Paul Siegfried, senior vice president and credit card business leader at TransUnion.
Most households have seen their monthly expenses rise as the result of the ongoing inflation crisis. Although the consumer price index has fallen from a peak of 9.1%, it remains notably higher than pre-pandemic levels. And when compared with January 2021, before prices began to spike, inflation is up more than 18%. The findings come shortly after the New York Federal Reserve released new data revealing that a growing number of Americans are falling behind on their monthly credit card payments.
It could be that consumers drained the excess savings they built up during the pandemic but are still spending at high levels – even though that money is gone. The spike may also be the result of churn in the labor market. Americans lose their jobs and then find employment elsewhere at a lower salary. Another possibility is that some Americans' credit scores artificially rose when student loan debt stopped being reported to credit bureaus during the pandemic.
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