The amount of debt United States citizens owe on their credit cards has crossed the $1 trillion threshold, meaning what some call a modern “debt trap” is showing no sign of ending and may, in fact, be getting worse. These numbers mean that those who do not pay their credit cards off in full each month, are carrying around balances of $9,600.
The increasing amount of credit card debt does not necessarily mean people in the Rockland County area of New York are spending more money and deciding to charge it. Instead, reports point to rising interest rates as the cause of the latest debt spike.
A year or so back, people were paying about $1,185 interest on their balances each year; now, that number is $1,254 and forecast to rise to $1,301, thanks to recent hikes in the Federal Reserve’s interest rate, an increased cost which the largest banks pass on to consumers willing to charge things on a credit card.
Unfortunately, the rising debt load is also part of a nationwide inflation trend under which consumers are paying more money for necessary services. The cost of food has shot up by 36 percent since 2003 and housing costs have also gone up by just under one-third. The cost of medical care has increased by a whopping 57 percent. Most wages, on the other hand, have gone up by only 21 percent.
At this stage, the economy is still decent enough, and it seems average New Yorkers are simply absorbing the extra costs and continuing to pay their bills. The frequency of defaults, though on the increase, remain relatively low. However, with these sorts of numbers rolling in, Rockland and Garnerville residents may need to think about bankruptcy as a possible credit card debt escape hatch should the economy turn sour.
Source: New York Post, “Americans are swamped in $1 trillion of credit card debt,” Catherine Cuan, April 16, 2017