Report: Credit card debt increasing

Credit card debt is on the rise as high inflation and rising interest rates continue to put pressure on American consumers, according to a recent report from the travel and finance firm Upgraded Points.

Credit card balances fell by more than $120 billion in 2020 as stimulus checks ballooned Americans’ savings accounts, followed by another $28 billion from December 2020 to April 2021. Inflation has since increased at a substantial pace, causing Americans to take out more credit than before. Aggregate limits on credit cards grew by $100 billion from the first to second quarter of this year, the report stated, while credit card balances increased by $46 billion over the same time.

 The $890 billion in consumer credit card debt during the second quarter of this year was still below the pre-pandemic peak of $930 billion in the fourth quarter of 2019, Upgraded Points noted, but credit card debt remained 9.1 percent higher in the first quarter of this year than in 2021. That increase grew to 12.7 percent in the second. Survey data was drawn from the Federal Reserve Bank of New York’s Household Debt and Credit Report and Experian’s FICO Score by State. 

“Prices for essentials like food, energy and shelter have risen rapidly and remained at elevated levels,” the report said. “Savings rates, which had increased to historic heights earlier in the pandemic, are now on the decline, leaving households less in reserve to help weather the effects of inflation.”  

Cardholders are seen as being increasingly at risk of falling behind on payments. Though the share of credit card debt in serious delinquency remains at historically low levels after falling in 2020-21, the percentage of newly delinquent credit card debt increased in the first two quarters of this year, from 4.1 percent at the end of 2021 to 4.76 percent. 

The report also evaluated the states with the highest credit card delinquency rates. According to the report, Minnesota had the fourth-lowest credit card delinquency rate at only 5.78 percent at the end of last year, lower than the national 8.22 percent mark. Across the United States, the average per capita credit card debt was $3,060, and credit card debt as a share of all non-mortgage debt was 18.4 percent. The average credit score was 714.  

The states with the highest credit card delinquency rates were in the southeast and southwest, according to the report. Three states in those regions — Nevada (12 percent), Florida (10.66 percent) and Arkansas (10.23 percent) — had more than 10 percent of credit card debt be at least 90 days delinquent. The Upper Midwest and New England had the lowest delinquency rates, including Wisconsin (5.34 percent), Minnesota (5.78 percent) and Vermont (6.03 percent).