(PartiallyPolitics.com) – Americans now owe $1 trillion in credit card debt according to some. Currently, credit cards have an interest rate of 24 percent in some cases, which is the highest they have been since the Reaganomics era.
Another record found that the typical American household now has $10,000 in credit card debt. While that might not sound like a lot of debt to some, it can be extremely hard to pay it off. For example, if someone was making $250 per month, with 24 percent interest, then they would need to be paying until 2030 in order to pay that debt off. What’s more, they will end up spending a total of $20,318 in order to pay off that $10,000 debt.
Ted Rossman, a senior industry analyst at Bankrate.com argued that it was hard to build wealth when the interest rate was at 20 percent.
The Federal Reserve has put the nation’s credit card debt at $986 billion. This marks a $250 billion increase in two years. However, some other estimates, such as a WalletHub report have put the total card debt at around $1.2 trillion at the end of 2022.
Only two years ago, the national credit card debt was declining from $850 billion at the start of 2020, to less than $750 billion in the spring of 2021. Jill Gonzalez, a senior analyst at WalletHub stated that during that time people were paying off “a record amount of debt.” However, as soon as the pandemic ended and spending increased, savings dwindled and the spike in the interest rates led to credit card debt increasing by $86 billion in the fourth quarter of 2022.
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