U.S. consumers have hit a record high when it comes to credit card debt. According to a recent WalletHub study, American consumers added a record $179.4 billion in new credit card debt to the already-existing credit card debt in 2022. These numbers are expected to increase as we move into the second half of 2023.
The largest increase was seen in the fourth quarter of 2022 with an increase of $84.9 billion in that quarter alone. A fourth-quarter increase is not unusual, as it is usually followed by a first quarter pay-down. However, once 2023 began, WalletHub found that American consumers only paid down their credit card debt by $24 billion, which is the second smallest first-quarter credit card debt paydown seen in the last decade.
Currently, the average household’s credit card balance is $9,654. In certain metropolitan areas, however, this average is much higher. For instance, in Santa Clarita, California, the city with the highest credit card debt increase in the country, the average household credit card debt is a record $19,715.
In their study, WalletHub released a list of cities with the largest year-over-year increase in credit card debt. Santa Clarita, California topped that list, but two Florida cities have seen the largest increase. Port St Lucie, Florida, came in 12th with a household credit card debt increase of $3,427, and Pembroke Pines, Florida, with a household credit card debt increase of $3,341. The average household credit card debt in Port St. Lucie is an estimated $14,026, while the average household credit card debt is $16,648.
While not in the top 20, Orlando, Florida, was listed as 22 with Hialeah, Florida coming in at 23 for the largest increase in consumer credit card debt.
In addition, WalletHub also conducted a consumer survey regarding credit card debt spending and a potential Fed rate increase expected on June 14. In this survey, they found that 35 percent (35%) of American consumers say that their credit score has been negatively affected by inflation. Two in five people surveyed expressed concerns that a Fed rate increase will force them into more debt rather than forcing them to pay off their already-existing debt.
Concerns of a potential recession down the road were also expressed in the survey with 56 percent (56%) of those surveyed said they were not financially prepared for a potential recession. Lastly, one in every four Americans reported that their job is at risk if the Fed continues to increase interest rates.
WalletHub is projecting that credit card spending will only increase as the year goes by. They predict that American consumers will end 2023 with $150 billion more in credit card debt than what they started with at the start of 2023.
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.
Filing for bankruptcy is 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.
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.
