Credit card debt surged in the United States from April through June as Americans borrowed billions of dollars to continue spending in the face of growing inflation, according to a Tuesday report from Federal Reserve Bank of New York.
Credit card debt surged as inflation forced Americans to borrow more
Credit card balances increased $46 billion in the second quarter, a 5.5 percent increase from the first quarter, and there was also an uptick in new credit card accounts. The 13% increase from the second quarter of 2021 to the second quarter of 2022 was the biggest such jump in more than 20 years.
“Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices,” researchers for the New York Fed said in a news release.
The numbers reflect the Bureau of Economic Analysis’s consumer spending report released last week, which showed that spending in June climbed 1.1 percent. Similar to the New York Fed’s findings, gas prices, which surged past $5 a gallon in many parts of the country in the second quarter, and inflation, which jumped 9.1 percent, year over year, in June, were likely the drivers of the increased debt.
The report released Tuesday found that household debt increased in the second quarter by $312 billion, or 2 percent, compared to the first quarter. Total balances are now $2 trillion higher than before the pandemic. Mortgage balances saw the highest increase, which is in line with a the central bank’s increased interest rates to cool down the blazing hot housing market.
Source: WP
