Credit card debt hits $866B as consumers struggle with inflation | So Good News


Credit cards and personal loans have skyrocketed in recent months as many consumers rely on such options to deal with financial problems caused by inflation.

According to TransUnion’s Quarterly Credit Industry Insights Report, bank card transactions rose 19% in the third quarter from a year ago, to $866 billion. This was largely driven by the growth of Gen Z and Millennial borrowers whose rates increased by 72% and 32%, respectively, according to the report.

At the same time, the number of private documents and the interest rate of loans has reached a high level and the number of accounts per consumer, according to the report, a consumer credit reporting agency.

This increase is due to the financial problems that consumers are facing “the drop in prices, and again with the high interest rates that the Federal Reserve is setting to reduce,” Michele Raneri, vice president of research and consulting in the US. TransUnion, he said in a statement.

A credit card used at a gas station
The average credit card debt per borrower increased from $4,857 to $5,474.
AFP via Getty Images

Overall, the number of credit cards issued in the third quarter rose to 510.9 million, up from 474.2 million in the same period a year ago. Meanwhile, credit card debt per borrower rose from $4,857 to $5,474.

The number of buyers with access to a mortgage also increased from 19.2 million to 22 million, according to the data. The average borrower’s debt is just over $10,700, according to the data. This time a year ago the average debt per borrower was $9,387.

Delinquencies – meaning late monthly repayments – have been on the rise over the past year and have already passed before the pandemic, according to the report.

“Unsecured loans have seen significant growth in origination and consolidation recently. This growth has been fueled, in part, by a significant increase in high-risk loans,” the report said. “This increase, combined with the economic damage to subprime buyers due to inflation, has led to an increase in delinquency, which has continued since before the pandemic.”

However, as long as “job numbers remain strong, there should continue to be a constant flow of customers looking for new credit products, credit cards and personal loans in particular,” according to Raneri.

There will also be “a lot of lenders who want to lend to them,” Raneri added.

This means we will see continued use of credit cards especially as “interest rate increases and inflation continue to pressure consumers,” according to Paul Siegfried, senior vice president and head of the credit card business at TransUnion.


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