Topline
Consumer credit hit a record high of $4.82 trillion in February, according to a new report from the Federal Reserve, continuing a pattern of historically high rates of debt that began at the start of 2022, as interest rate hikes add pressure to mounting personal debts.
The Federal Reserve reported a record-high amount of credit in February.
Key Facts
Outstanding consumer revolving credit, which is mostly based on credit card balances, as well as auto loans, rose 5% over February, 2022, compared with January’s 12.7% jump and December’s 8.4%, according to the Fed’s report released Friday.
Credit card debt has been climbing for close to two years following a decrease during the pandemic: after falling 13% in 2020, debt spiked 9% in 2021 and almost 18% in 2022, a record growth rate, according to Fed data.
While Americans are taking out increasing amounts of credit card debt, mortgages and student loans are rising more slowly, jumping 3.4% in February compared to 1.7% and 2.2% in December and January respectively.
Total consumer credit has risen $34.8 billion since December to a total of roughly $4.82 trillion, which comes to about a quarter of the total amount of Americans’ after-tax income.
Big Number
$5,900. That’s how much credit card debt the average American has, according to data firm Experian.
Key Background
Consumer debt has risen in tandem with declining liquid savings after an initial bump associated with pandemic assistance in 2021, data from financial services firm Bankrate shows. Now that pandemic-related federal aid has slowed and inflation is up, household savings are falling, the Bankrate data shows, which could be a factor in increased credit card debt.
Further Reading
Rising Consumer Credit Could Pose Risks In Slowing Economy (Forbes)
Source: https://www.forbes.com/sites/katherinehamilton/2023/04/07/americans-racked-up-record-consumer-debt-in-february/