by Paige Terryberry
Senior Analyst for Fiscal Policy, John Locke Foundation
Credit card debt jumped again in the second quarter of 2022 as inflation caused people to spend more money to consume the same basket of goods.
Americans now hold nearly $890 billion in credit card debt.
Since the first quarter of this year, credit card balances increased by $47 billion, a 13% year-over-year increase and the largest increase in 20 years, according to a report from the Federal Reserve Bank of New York.
During the pandemic, credit card balances dropped well below the record levels of 2019. Today’s balances are still $40 billion below pre-pandemic levels. But with rising interest rates and inflation, experts say it is only “a matter of time before credit card balances surpass the 2019 record.”
Fifty-four percent of active credit card accounts carried a balance in the second quarter of this year, the third consecutive quarter showing an increase.
And unfortunately, average annual percentage rates (APRs) are also rising, further endangering those carrying credit card debt. This is expected to continue as the Federal Reserve is poised to announce additional interest rate hikes.
According to Lending Tree, an online lending marketplace connecting borrowers with loan operators, credit card holders in North Carolina are just below average in the country, holding $6,209 in credit card debt on average; the national average is $6,569.
Unfortunately, rising credit card debt and APRs are just some of the adverse effects of government-induced inflation. Yet as average Americans are saddled with more debt, the Biden Administration dons rose-colored glasses.
It would be hard to imagine more misleading messaging from the Biden White House regarding our country’s fiscal health.
President Biden applauds himself for the $1.9 trillion American Rescue Plan Act, student loan forgiveness which could cost more than $1 trillion, and the Inflation Reduction Act, each fueling inflation that burdens poor households most. Biden’s Press secretary said President Biden’s record on fiscal responsibility was “second to none.”
After yesterday’s dismal consumer price index report showing inflation remains high, triggering the worst stock market meltdown in two years, Biden called it “welcome news for American families.”
These harmful policies have consequences – unfortunately, they are shouldered by working Americans. But the Biden Administration attempts to spin the narrative. It is time to send leaders to Washington that will stop the spending sprees and hold politicians accountable for their blatantly false messaging to the American people.