As inflation squeezes people’s budgets and raises concerns about a prolonged recession, WalletHub has released its latest study on credit card debt, the Federal Reserve’s rate hike report, and a report on the cities with the most and least sustainable credit card debt this to illustrate consumers are fine.
Key Credit Card Debt Study Statistics
Record increase in Q3. Credit card debt increased by nearly $39.6 billion in the third quarter of 2022, an all-time record for the third quarter of the year.
Larger than normal construction. The increase in consumer credit card debt in Q3 2022 was 2.4 times the post-Great Recession average for a third quarter.
Record annual forecast. WalletHub expects consumers to end the year with about $110 billion more credit card debt than they started, close to an annual record.
More expensive debt. A Federal Reserve rate hike in December would cost those with credit card debt at least an additional $3.2 billion over the next year alone. That’s on top of the $22.9 billion increase already caused by the Fed’s earlier rate hikes this year.
For full study results, visit: https://wallethub.com/edu/credit-card-debt-study/24400.
The cities with the most persistent credit card debt, ranking first through ten, were Fremont, CA; San Francisco, CA; Irvine, CA; San Jose, CA; Jersey City, NJ; Madison, WI; Columbia, MD; Seattle, WA; New Haven, Connecticut; and Cedar Rapids, IA.
These cities with the least sustainable credit card debt were: Hialeah, FL; Miami, Florida; Juneau, AK; Port of St. Lucie, FL; Pembroke Pines, FL; El Paso, TX; Norfolk, VA; Knoxville, Tennessee; Gulfport, MS; and San Antonio, TX.
For the full ranking go to: https://wallethub.com/edu/cities-with-the-least-sustainable-credit-card-debt/86237.
63 percent of Americans say their wallets have been affected by the Fed’s rate hikes this year.
Two in three Americans believe inflation will be worse in 2023.
Almost three in four people believe the recent elections will not help tame inflation.
49 percent of Americans say they are not financially prepared for a recession.
54% of Americans say inflation has affected their vacation plans.
Sixty-eight percent of people say inflation has had the biggest impact on their monthly spending on groceries, followed by gasoline (23 percent) and housing (9 percent).
The full survey is available at: https://wallethub.com/edu/sa/fed-rate-hike-survey/48053.
Questions and Answers with WalletHub
Analyst Jill Gonzalez
Are Americans’ Finances in Good Shape Heading into the Holidays?
Americans are financially overwhelmed ahead of the holidays. Consumers entered the fourth quarter of the year fresh from a record for most credit card debt added during the months of July, August and September — a whopping $39.6 billion. By the end of the year, we can expect to have added about $110 billion to our credit card debt overall over the course of 2022. US consumers have struggled with credit card debt for years, and the trend is only increasing due to high inflation and the Fed raising interest rates
How is inflation affecting consumers?
A new WalletHub survey found that 68 percent of people say inflation has impacted their monthly grocery spending the most, followed by gas and housing. Not only are we feeling the pinch of inflation at the supermarket, at the gas pump, and on the home front, we’re also throwing a monkey wrench at holiday traditions. According to WalletHub’s survey, 54 percent of people say inflation has hampered their vacation plans this year.
How do Americans feel about inflation right now?
Americans are currently pessimistic about inflation, according to a new WalletHub poll, which shows two-thirds of people believe inflation will be worse in 2023 and three-quarters of people believe the recent election won’t solve it of the problem will contribute. Also, inflation is making most Americans feel relatively poor this holiday season, which can make it harder to feel the holiday cheer.
How do Fed rate hikes affect people?
WalletHub’s latest Fed Rate Hike Survey found that 63 percent of people said their wallets were affected by the Federal Reserve’s repeated hikes in its target interest rate this year. Rate hikes immediately hurt those with credit card debt, and Americans owe billions of dollars to credit card companies. Rate hikes have also increased the cost of new borrowing and appear to be a major contributor to the housing market slowdown.
What advice do you have for people trying to get rid of their credit card debt?
If you have good or excellent credit, try to take advantage of a 0 percent balance transfer credit card while the offers are still attractive. Right now, applicants with above-average credit can get an introductory 0 percent APR for 15 to 21 months, which could result in savings of hundreds of dollars. Such offers tend to dry up during a prolonged recession.
Which cities perform best and worst when it comes to credit card debt?
According to WalletHub’s latest study, four California cities — Fremont, San Francisco, Irvine, and San Jose — lead the way when it comes to the most sustainable credit card debt. On the other hand, two South Florida cities — Hialeah and Miami — currently have the riskiest relationship with credit card debt.