Over the last several months, consumer debt has climbed at a steep, steady pace as Americans struggle with rising prices. November was no different, with consumers piling on another $27.9 billion in debt.
With the 7.1% increase in consumer debt in November, Americans now owe a record $4.76 trillion, according to the latest data from the Federal Reserve.
This is a big problem for the Fed as it tries to battle rising prices with interest rate hikes. The inflation that the central bank created is forcing people to go deeper into debt. Meanwhile, the inflation fight is making debt more and more expensive.
The Federal Reserve consumer debt figures include credit card debt, student loans, and auto loans, but do not factor in mortgage debt. When you include mortgages, US consumers are buried under more than $16.5 trillion in debt.
Americans are running up credit card balances at a dizzying pace. In November, revolving credit increased by $16.4 billion. With that 16.9% increase, Americans now owe nearly $1.19 trillion in revolving debt.
To put the increase into perspective, the annual increase in 2019, prior to the pandemic, was 3.6%. It’s pretty clear that with stimulus money long gone, Americans have turned to plastic in order to make ends meet as prices continue to skyrocket.
The rapidly growing levels of credit card debt should raise eyebrows, but as ZeroHedge pointed out in a tweet, the real problem is the double whammy of rising debt and interest rates.
Average credit card interest rates have eclipsed the record high of 17.87%. The average annual percentage rates (APR) currently stand at 19.59%.
NBC News reveals just how much rising interest rates are costing indebted consumers.
This episode is also available as a blog post: http://freedomreportage.com/2023/01/11/rising-consumer-debt-interest-rates-are-a-ticking-time-bomb/
