Total credit card balances increased to $914 billion between July and December 2024, according to a report released by the Philadelphia Fed Wednesday. This figure represents the highest credit card balance since the Philadelphia Fed began tracking this data in 2012.
The percentage of credit card accounts making only the minimum payment each month also reached a 12-year high of 10.75%. “Consumers are not only spending more, leading to higher balances, but paying off less, increasing revolving amounts,” the report said.
This surge in credit card debt and consumers making only the minimum payments on their cards underscores growing economic pressures on American households. Already belabored by high interest rates and stubborn inflation, the high price of living has not abated as slowly as most Americans have hoped.
These concerning statistics on credit card debt come alongside the Federal Reserve’s decision to hold interest rates steady on Wednesday in an effort to slow inflation. While the Federal Reserve believes that their strategy has had “meaningful effects in bringing inflation under control,” Americans are experiencing a very different reality.
Case in point: 59% of credit card holders used their credit to purchase groceries in the last 3 months, according to a December 2024 report from PYMNTS Intelligence. The report further highlights that the most common use for credit among American consumers is purchasing essential household goods, not frivolous items.
“Inflation down to 2%…is what we’re trying to achieve,” said Federal Reserve Chairman Jerome Powell to reporters on Wednesday. “Consumers will pick that up, of course, in the things that they buy at the grocery store.”
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Karya Bintang Abadi