The latest report from the New York Federal Reserve has revealed some concerning trends in credit card usage among Americans. According to the report, nearly 20% of credit card borrowers have been utilizing at least 90% of their available credit in the first quarter of 2024. This signals a worrisome trend of high credit utilization that could lead to financial troubles for many individuals.
Furthermore, both credit card balances and delinquencies have been on the rise since late 2021, surpassing pre-pandemic levels. The average credit card interest rate has reached an all-time high of 21.6%, with the average card balance sitting at $6,360 at the end of 2023. Additionally, 6.9% of credit card balances have fallen into “serious delinquency” in the first quarter of 2024, indicating a growing issue of unpaid debts.
Younger Americans, particularly Gen Z and millennials, are more likely to be maxed out on their credit cards compared to older generations, mainly due to lower credit limits. This trend is particularly worrying as it could lead to long-term financial struggles for these individuals.
With ongoing inflation and elevated interest rates, experts do not foresee the credit card crisis easing anytime soon. They recommend that cardholders stop using maxed-out cards, pay down balances as soon as possible, and consider asking for a higher credit limit to lower credit utilization ratios.
Individuals struggling with credit card debt are advised to take proactive steps to address the issue, such as hiding the card or seeking help from financial planners. It is essential for individuals to take control of their finances and avoid falling into the trap of high credit card debt to secure a stable financial future.
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