For most Americans, higher interest rates and inflation go hand in hand.
Credit card annual percentage rates are now close to 20% on average and are expected to rise even further in the wake of this week’s further rate increase by the Federal Reserve. In the present time, more people are turning to credit to pay for essentials like food and rent, which are becoming constantly more expensive.
TransUnion’s most recent quarterly data boosted overall credit card debt to a record $930.6 billion at the end of 2022, an increase of 18.5% from a year before.
During the same time frame, TransUnion discovered that the average balance increased to $5,805.
According to Bankrate, it might require over 17 years to pay off this typical credit card bill if you paid the minimum payments, and will cost you over $8,213 in interest.
In total, 202 million new credit accounts are created in the fourth quarter, primarily by members of Gen Z, or adults between the ages of 18 and 25, and the number of credit cards issued reached a record 518.4 million.