Inflation and high interest rates push Americans towards credit card debt crisis

WASHINGTON — More Americans are accumulating credit card debt, and the longer it lingers, the harder it becomes to pay off.

A recent report from Bankrate reveals nearly half of Americans with credit cards carry a balance from month to month, with the majority of that group remaining in debt for over a year.

Age appears to play a significant role, as more than half of Millennials and Gen Xers reported carrying credit card debt, compared to just 42% of younger Gen Z cardholders.

Financial analysts indicate that inflation and high interest rates are major factors contributing to the increase.

Higher prices for essentials such as gas, groceries, and rent have led many Americans to rely more on credit cards to make ends meet.

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The report comes shortly after the Federal Reserve announced its decision to maintain interest rates at a 23-year high.

“The economy is moving closer to the point at which it will be appropriate to reduce our policy rate,” said Federal Reserve Chair Jerome Powell.

To effectively manage and pay off debt, experts advise paying more than the minimum required payment.

Greg McBride, Chief Financial Analyst at Bankrate, emphasized the importance of prioritizing debt repayment.

“So if you have high-cost credit card debt or even a home equity line of credit, many of which have rates in the double digits right now, you need to continue to prioritize paying down that debt aggressively,” McBride said.

Financial advisors recommend starting by evaluating your budget and reducing expenses.

Then, focus on paying off your highest-interest debt first to make meaningful progress toward becoming debt-free.

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