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US credit card interest rates hit record high

Is it better to go hungry or wake up in debt? That’s a terrible question to ask, but it’s important to know. While hungry can always be cured with a meal, debt can spiral out of control.

After all, the great feature of a credit card, is that it can pay off the debt of other credit cards. Credit card debt can compounds over time and can become a form of financial slavery if you’re not careful.

Many Americans are in this trap and data shows how serious this problem has become. There has been a 50 percent increase in credit card expenses since 2020, before President Joe Biden's tenure. This financial strain, accentuated by record high interest rates and rising delinquencies points toward a stealthy cost of living crisis, hidden beneath rosy GDP prints and consumption numbers.

This might be the reason why Americans seem pessimist about the outlook of the US economy, even though the numbers point towards the economy being in rude health.

With credit card balances now reaching a historic $1.13 trillion, the issue of credit card debt, amplified by recent interest rate hikes, pointing towards growing financial strain for lower-income families in the US. Rising incomes and employment may offset these pressures.

Source: Financial Times

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