The worst inflation of all: Record levels of debt
High consumer prices are one thing. Inflation has taken its toll on most household finances. But add high interest rates on top of soaring consumer debt, and the financial pressure increases even more.
How soon should you take action if you’re struggling to pay your bills on time? Days not weeks.
Rising debt and delinquencies
Credit card balances increased $61 billion in the fourth quarter of 2022 to $986 billion, surpassing the pre-pandemic high, according to an analysis released by the Federal Reserve Bank of New York. It’s the most significant debt gain in the history of the New York Fed’s data, compiled since 1999.
And timely payments are becoming an issue. “The share of current debt becoming delinquent increased again in the fourth quarter for nearly all debt types,” the report said.
In particular, the Fed noted that younger borrowers — in their 20s, 30s and 40s — were struggling to keep up with monthly payments:
“Some of these borrowers are struggling to pay their credit card and auto loans even though payments on their student loans are not currently required. Once payments on those loans resume later this year under current plans, millions of younger borrowers will add another monthly payment to their debt obligations, potentially driving these delinquency rates even higher.”