Americans have saddled themselves with credit card debt. Now renters and the poor are falling behind
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Lower- and middle-income Americans, particularly renters, are falling behind on their debts and facing financial stress due to credit card debt and inflation. Americans held over $1.05 trillion on their credit cards in Q3 2023, a record high. Credit card delinquency rates and charge-off rates are now well above 2019 levels and expected to keep climbing. The average interest rate on a bank credit card is roughly 21.5%, the highest since 1994. Renters have been hit hard by inflation, with the median rent for a property with up to two bedrooms increasing from $1,424 to $1,713. The recent reintroduction of student loan payments could further impact the ability of lower-income customers to repay their debts. Banks are being more conservative in giving out loans, making it less likely for Americans to refinance their high credit card bills into lower interest loans. Economists see rising delinquencies as a growing risk to the economy, especially if student loans become too burdensome for younger Americans.
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