Latest figures show rising consumer debt
Consumer credit jumped a whopping $23.7 billion in November, according to the Federal Reserve. That’s much more than previous months — and also much more than economists expected. Revolving credit, mostly credit card debt, rose more than 17% on an annual basis.
All this continues a trend of households struggling with high and rising prices, leading to a surge in debt and delinquencies.
Credit card interest rates are the highest they’ve ever been, balances are up 40% in the past three years, and delinquencies are now the highest since 2012, said Ted Rossman at Bankrate.
“More people are carrying more debt for longer periods of time,” he said.
High- and middle-income households could catch up, using savings and current income. But “lower-income households have been hit harder by inflation and higher interest rates, and they are more likely to carry balances,” Rossman said.
Polling firm Morning Consult finds low-income consumers increasingly strained, said economist Kayla Bruun.
“The monthly debt-to-income ratio, and that includes some things like buy now, pay later, continued to trend higher,” she said.
Meanwhile, supplemental pandemic-era food stamp benefits were cut off back in March. And more recipients are now falling behind, added Justin King at financial technology firm Propel.
“‘The rent eats first’ is a saying for a reason,” he said. “People try to pay rent on time, but they may defer their utility payments.”
Since March, King added that more low-income households are delaying or paying partial utility bills, missing meals and visiting food banks.
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