NewsNationalScripps News

Actions

Credit card debt is up, and taking longer to pay down

At the end of 2023, Americans had over $1 trillion of debt in their credit card balances, a record high.
Credit card debt is up, and taking longer to pay down
Posted
and last updated

In many ways, the economy is improving for consumers, from cooling inflation to a strong job market. But many are still struggling financially, and when they don't have enough money to cover emergency expenses, they’re taking on more and more credit card debt — and taking longer to pay it down. 

Andrea Nunez and her husband were left with $100,000 in credit card debt after medical bills wiped out their savings accounts. They’re among the millions racking up debt and struggling to pay it down.  

At the end of 2023, Americans had over one trillion dollars in credit card balances, a record high.   

That’s according to the latest data from the Federal Reserve Bank of New York, which found the rate of households at least 90 days overdue on credit card payments is at its highest level since 2011.     

“That's really a function of two things: No. 1, the fact that people have had to lean on credit card borrowing more often. Secondly, it's the high cost of that borrowing,” says Bankrate’s senior economic analyst, Mark Hamrick.  

He adds that the economy is surprisingly strong, thanks to falling inflation and a solid labor market.   

But according to a new report Wednesday from Bankrate, less than half of adults can afford to pay a $1,000 emergency expense from their savings account, and 21% said they’d need to finance payments with a credit card to afford emergency spending, which Hamrick says, “merely digs a deeper hole for them to have to climb out of financially.” 

If you’re struggling, Hamrick recommends talking to your bank.   

A Lending Tree survey found 76% those who asked for a better interest rate were successful with banks lowering rates on average by six percentage points, helping consumers save $500 or more in interest.  

You could also transfer your balance to a card with a lower rate, but only if you can pay it off during the promotional time period.   

But the ultimate strategy, Hamrick adds, is to have emergency savings.  

SEE MORE: 'Buy now, pay later' plans: The hidden risks you need to know


Trending stories at Scrippsnews.com