Americans added more than $11 billion of consumer debt in May
Americans added more than $11 billion of consumer debt in May
The tally is in for consumer credit; that’s borrowing and paying interest, when we spend money now and pay it back later.
In May, according to the Federal Reserve, American consumers added $11.3 billion to what they owe on credit cards, auto and student loans. The increase in consumer credit was higher than economists expected, and nearly double the $6.5 billion debt added back in April.
With an economy that’s gradually slowing down in the face of high interest rates, consumers taking on more debt is a bit of a surprise.
“Credit card balances rising again — this is a pretty sharp increase,” said Ted Rossman, a senior industry analyst at Bankrate.
“People are definitely spending,” he added. “That’s supporting the economy. But it’s not good to the extent that many of these cardholders are paying an average interest rate of over 20%.”
Loan delinquencies 90-days-or-more past due are now the highest in more than a decade.
But lenders don’t seem too worried.
Most consumers can cover their mounting debts, said Mike Schenk at the Credit Union National Association.
“Incomes are rising fairly quickly. But I think from a personal financial wellness perspective, many consumers have experienced a decidedly hard landing, And I think many more will.”
Schenk predicts unemployment will continue to increase this year, making it harder for cash-strapped consumers to keep up.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
