A new report revealed that household debts in the U.S. continue to rise as more people borrow with credit cards to ends meet due to the higher inflation rate.
Total Household Debts In the 3rd Quarter
The global pandemic, higher inflation rate, and the increase in interest rates have all contributed to the increase in household debts in the country. A new report revealed that household borrowing reached $16.51 trillion in the 3rd quarter.
The reported household debts increase to $351 billion compared to the previous quarter or a jump of 8.3 percent compared to last year of the same quarter. This is so far the fastest increase in the past 14 years.
Meanwhile, the Federal Reserve Bank in New York also revealed in its report on Tuesday that the overall borrowing is $2.36 trillion, which is higher than the level of household debts seen at the end of 2019 or before the wake of the global pandemic.
More People Rely on Credit Cards
Donghoon Lee, a New York Fed research advisor, said “Credit card, mortgage, and auto loan balances continued to increase in the third quarter of 2022 reflecting a combination of robust consumer demand and higher prices. However, new mortgage originations have slowed to pre-pandemic levels amid rising interest rates.”
According to a report published in DAILY MAIL, the increasing inflation rate pushed more Americans to use credit cards to borrow money to ends meet. More people also struggle to afford high car prices, more expensive homes, and soaring gasoline prices.