{"id":89542,"date":"2023-01-20T11:04:40","date_gmt":"2023-01-20T15:04:40","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=89542"},"modified":"2023-01-27T17:02:32","modified_gmt":"2023-01-27T21:02:32","slug":"credit-card-debt-in-america","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/credit-card-debt-in-america\/","title":{"rendered":"Credit Card Debt in America Exposes a Harsh Reality"},"content":{"rendered":"\n

What’s causing the record-high credit card debt<\/a> in America? Why are Americans spending so much yet saving so little?<\/p>\n\n\n\n

Credit card debt in America rose to $890 billion in 2022, with total household debt hitting a record high of $16.5 trillion. Credit is a survival tool for most Americans\u2014and the debt tied to it is so ubiquitous in the U.S. that it\u2019s become normalized.<\/p>\n\n\n\n

Read on to learn more about credit card debt in America, including tips for managing debt.<\/p>\n\n\n\n\n\n\n\n

Debt in America Is Rising Rapidly<\/h2>\n\n\n\n

For many Americans, the new year came with resolutions to put their best foot forward\u2014and the rude awakening of holiday spending hangovers, rising inflation rates, and the looming threat of a recession. January may be a month of personal finance reckoning as credit card debt in America reaches an all-time high.<\/p>\n\n\n\n

Despite a challenging economic forecast<\/a> for 2023, many Americans spent the past year charging up a storm and going into debt while doing it: In the second quarter of 2022, total household debt hit a record high of $16.5 trillion<\/a>, with credit card debt ringing in at $890 billion\u2014up from $790 billion a year earlier. <\/p>\n\n\n\n

In this article, we’ll examine the factors contributing to the record credit card debt and spending in America, what lies ahead in 2023, and tips for paying down debt.<\/p>\n\n\n\n

Americans, Credit, and Spending<\/h3>\n\n\n\n

The relationship between spending and credit card debt is complicated in America, which is understandable given the mixed messages around the subject and the realities of daily life for most.<\/p>\n\n\n\n

On the one hand, financial guru and author of The Total Money Makeover<\/em><\/a>, Dave Ramsey, argues that you don\u2019t need a credit score<\/a>. He and other experts warn against falling into the trap of paying extra money in credit card interest each month, which can add up quickly and is part of the reason so many Americans are up to their ears in debt right now. <\/p>\n\n\n\n

On the other, experts say that credit is a basic survival tool<\/a> for most Americans, enabling those who can\u2019t afford to pay for everything in cash to pay for otherwise unattainable items like security deposits, a home mortgage, or medical emergencies.<\/p>\n\n\n\n

The Problem With Credit: Debt<\/h3>\n\n\n\n

Most financial experts agree that the problem with credit is debt from late interest fees when people fail to pay their bills on time and in full\u2014and credit card debt in America is so ubiquitous that it\u2019s become normalized. In 2022, 60% of Americans reported carrying monthly credit card debt for at least a year (up 10% from a year earlier), 40% for two years, and 28% for three. <\/p>\n\n\n\n

Strikingly, debt in 2022 soared amid an economy that, while booming, was rife with supply chain issues that pushed up the cost of goods and saw some of the highest inflation rates in fifty years<\/a>. Even the threat of a recession atop the pocketbook pain caused by these realities didn\u2019t stop Americans from spending up a storm while starving their savings accounts<\/a>.<\/p>\n\n\n\n

Why the Record Spending and Debt in the U.S.?<\/h3>\n\n\n\n

Experts offer different theories on why spending and credit card debt have been sky high and rising in America:<\/p>\n\n\n\n