Financial experts say more Americans face growing debt and delinquent credit card payments this year as the effects of COVID-19 stimulus payments wane, looming federal interest-rate hikes take hold and inflation erases income gains.
Most credit card companies saw delinquent payments tick upward in November as the effects of government relief faded.
The Federal Reserve Bank of New York found last month that the average U.S. family owed $155,622 — a total of $15 trillion— in bills ranging from credit cards to mortgages as the cost of food, gas, housing, transportation and health care kept rising. That included $804 billion in credit card bills, a sum that increased throughout last year.
“With household debt at a record $15 trillion and real wages down by 2.4% in 2021 due to record inflation, the impact of any Fed tightening on marginal credit card borrowers is likely to be severe, leading to rising delinquencies,” said Hans Dau, a supply-chain analyst and CEO of the Mitchell Madison Group business consulting firm. “The COVID-induced suspension of economic realities will come to an end one way or another.”