Consumer Debt Increasing in the United States

Non-specific credit cards laid on top of each other. | Image by Bernie Photo via Getty Images

According to a report from Schiff Gold, the Federal Reserve says consumer debt in the United States is rising at an alarming rate as Americans experience the pinch of inflation. Hourly wages have increased by 5.5%, but when you factor in the rising cost of goods and services, actual earnings are actually down 2.6%.

Americans are coping with these rising costs by charging more and borrowing more. The latest data from the Federal Reserve indicate consumer debt has increased approximately 14%, rising by $52.4 billion.

According to the Federal Reserve, outstanding consumer debt in the U.S. is now $4.54 trillion. The Fed includes credit card debt, auto loans, and student loans in these figures. If mortgages were included, that number would be more than $15.8 trillion.

Schiff says that as stimulus dollars dry up and Americans deplete their savings, the average consumer turns to credit cards to sustain the rising cost of living.

American consumers added $31.4 billion to their revolving credit card bills in March. Overall, credit card debt is now at $1.1 trillion.

Unfortunately, consumers do not appear to be deterred by growing credit card debt. Consumers are finding ways to increase their borrowing power further. Federal Reserve numbers show that American consumers opened 229 million new credit card accounts in the first quarter of 2022. These numbers, according to Schiff, have exceeded pre-pandemic levels.

Interest rates have also continued to rise, so consumers can expect to be hit with higher interest payments each month.

The average annual percentage rate (APR) is currently just over 16%, according to Bankrate. According to the report by Schiff, analysts expect APR to increase to over 18% by the end of 2022.

Non-revolving consumer debt, including auto and student loans, will also continue steadily increasing. Records show this debt increased by $21 billion over the last year, a 7.4% increase.

Schiff reports that Americans paid down balances and retained their credit cards during the economic downturn when the pandemic started in 2020. Americans used stimulus dollars to pay their cost of living, but when the program ended, Americans started borrowing again. Since May 2021, consumer debt has experienced a steady increase.

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