American consumers are adding more to their credit card balances and falling behind on current payments, according to data from the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit.
According to this report, credit card balances hit a high of $1.08 trillion, increasing $48 billion from the previous quarter and increasing a record $154 billion from the previous year. This year-over-year increase is the largest one seen since the New York Fed began tracking this data back in 1999.
During the third quarter, household debt also increased by 1.3 percent to $17.29 trillion. Data also showed that a growing number of households struggled to pay off this debt, many of them becoming delinquent on their credit cards during this period. In fact, the rate of households becoming delinquent or becoming seriously delinquent, meaning the cardholders were 90 days or more past due, on their credit cards was the highest seen since the end of 2011.
Credit card balances saw a large increase in the third quarter, according to the New York Fed. At the same time, credit card delinquencies increased across the board, but more so with millennials and with those with car loans or with student loans.
Despite the fact that delinquencies are on the rise, New York Fed researchers attribute higher-quality mortgage loans to be the reason overall delinquencies are still below pre-pandemic levels.
Credit card balances have steadily been on the incline, but many attribute this fact to inflation and higher credit card rates. The New York Fed report does not distinguish between what has been paid in full and what has not, and many of the researchers believe some of these higher balances could reflect population growth, the rise in e-commerce, and the sign of a strong economy, indicating that the report is not showing as much financial distress as originally believed.
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, fees, 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.
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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.