With inflation putting pressure on people’s budgets and raising concerns about a prolonged recession, WalletHub has released its latest Credit Card Debt Study, Federal Reserve Rate Hike Report, and report on the Cities with the Most and Least-Sustainable Credit Card Debt to help illustrate how consumers are faring.
Credit Card Debt Study Key Stats
Record Q3 Increase. Credit card debt increased by almost $39.6 billion during Q3 2022, an all-time record for the third quarter of the year.
Bigger-Than-Normal Buildup. Consumers’ Q3 2022 credit card debt increase was 2.4X bigger than the post-Great Recession average for a third quarter.
Record Annual Projection. WalletHub projects that consumers will end the year with roughly $110 billion more in credit card debt than they started with, which would be close to an annual record.
More Costly Debt. A Federal Reserve interest rate increase in December would cost people with credit card debt at least an extra $3.2 billion in the next year alone. That’s on top of the $22.9 billion increase already caused by the Fed’s previous rate hikes this year.
Full study results can be found at: https://wallethub.com/edu/credit-card-debt-study/24400.
The Most-Sustainable Credit Card Debt cities were, from first through tenth, Fremont, CA; San Francisco, CA; Irvine, CA; San Jose, CA; Jersey City, NJ; Madison, WI; Columbia, MD; Seattle, WA; New Haven, CT; and Cedar Rapids, IA.
Those cities with the Least-Sustainable Credit Card Debt were: Hialeah, FL; Miami, FL; Juneau, AK; Port St. Lucie, FL; Pembroke Pines, FL; El Paso, TX; Norfolk, VA; Knoxville, TN; Gulfport, MS; and San Antonio, TX.
Full rankings are at: https://wallethub.com/edu/cities-with-the-least-sustainable-credit-card-debt/86237.
Key Findings
63 percent of Americans say their wallets have been affected by the Fed’s rate hikes this year.
Two in three Americans think inflation is going to be worse in 2023.
Almost three in four people think the recent elections will not help tame inflation.
Forty-nine percent of Americans say they are not financially prepared for a recession.
Fifty-four percent of Americans say inflation has affected their holiday plans.
Sixty-eight percent of people say inflation has affected their monthly grocery expenses the most, followed by gas (23 percent) and housing (9 percent).
The full survey is available at: https://wallethub.com/edu/sa/fed-rate-hike-survey/48053.
Q&A with WalletHub
Analyst Jill Gonzalez
Are Americans’ finances in good shape heading into the holidays?
Americans are stretched thin financially heading into the holidays. Consumers entered the fourth quarter of the year fresh off a record for most credit card debt added during the months of July, August and September – a whopping $39.6 billion. By year’s end, we can expect to have added a total of roughly $110 billion to our credit card debt tab during 2022. U.S. consumers have struggled with credit card debt for years, and this trend is only intensifying due to high inflation and Fed rate hikes
How is inflation affecting consumers?
A new WalletHub survey found that 68 percent of people say inflation has affected their monthly grocery expenses the most, followed by gas and housing. Not only are we feeling the pinch of inflation in the supermarket, at the gas pump and on the home front, but it’s also throwing a monkey wrench into holiday traditions. According to WalletHub’s survey, 54 percent of people say inflation has affected their holiday plans this year.
How do Americans feel about inflation right now?
Americans feel pessimistic about inflation right now, according to a new WalletHub survey showing that two-thirds of people think inflation will be worse in 2023 and three-quarters of people believe recent elections won’t help solve the problem. Plus, inflation is making most Americans feel relatively poor this holiday season, which can make it harder to feel the holiday spirit.
How are Fed rate hikes impacting people?
WalletHub’s latest Fed Rate Hike Survey found that 63 percent of people say their wallets have been affected by the Federal Reserve repeatedly increasing its target interest rate this year. Rate hikes immediately hurt people with credit card debt, and Americans owe billions of dollars to credit card companies. Rate hikes have also increased the cost of new loans and appear to be a major contributor to the slowdown in the housing market.
What advice do you have for people trying to get rid of 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 a 0 percent introductory APR for 15 to 21 months, which could produce hundreds of dollars in savings. Such offers tend to dry up during a prolonged recession.
Which cities are doing the best and the worst when it comes to credit card debt?
Four California cities – Fremont, San Francisco, Irvine and San Jose – lead the way when it comes to the most sustainable credit card debt levels, according to WalletHub’s latest research. On the other hand, two South Florida cities – Hialeah and Miami – have the riskiest relationship with credit card debt right now.
