American consumers are falling back into bad spending habits when it comes to credit card use, according to a recent study released by the personal finance website, WalletHub. Credit card debt increased by $39.6 billion during the third quarter of 2022. This increase is part of a larger trend that started in 2021, if not before.
During 2021, U.S. consumers added a total of $86.2 billion to the nation’s credit card debt balance. In the fourth quarter alone in 2021, credit card debt increased by $73.1 billion. Consumers did start the new year off well enough in 2022 by paying down approximately $12.5 billion in credit card debt, only to add $67.2 billion during the second quarter, followed by $39.6 billion during the third quarter. This figure is a record for Q3 reports.
In fact, outstanding credit card debt has increased by approximately 3.2 percent during the third quarter of 2022, when compared to the previous quarter.
When comparing credit card spending to past periods, the increase during the third quarter of 2022 was 2.4 times larger than the increase seen during the post-Great Recession period for a third quarter of the year.
Currently, the average household’s credit card balance is $9,260. This amount is $2,745 below what WalletHub says is their projected breaking point for household finances. This figure increased by 6.4 percent during the same time in 2021.
In their report, WalletHub also released a list of cities that have the least-sustainable credit card debt and the most-sustainable credit card debt. Essentially, those with the least sustainable credit card debt have the most work ahead of them if they want to work through this debt. Many Florida cities made this list, including Miami, Hialeah, Port St. Lucie, and Pembroke Pines, Florida. Unfortunately, no Florida cities made the list of areas with the most sustainable credit card debt. To determine these statistics, WalletHub pulled from figures reported to the U.S. Census Bureau, as well as the Federal Reserve and TransUnion.
WalletHub projects that consumers will end 2022 with around $110 billion more in credit card debt than they started the year off with, which would make an annual record.
As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.
Filing for bankruptcy is also a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills and personal loans. There are certain qualifications a consumer must meet in regard to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.
Those filing for bankruptcy can still protect valuable assets. Retirement income and savings are out of reach and protected under federal law, including: 401(k)’s, pensions, social security payments, qualified profit-sharing plans, and individual retirement accounts worth up to $1.245 million are all exempt from creditors during bankruptcy.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
