When looking at total levels of credit card debt in the United States for the second quarter of 2023, analysts found that there had been a $45 billion increase between that point and the first quarter of the same year. Moreover, they discovered that this massive jump had pushed the total amount of credit card debt that Americans hold to a historic level, topping $1 trillion for the first time.
On top of that, the number of people failing to pay off their credit card bills has been rising. In July, it went above 5%. Financial analysts believe that it’s just going to continue following that trend. One referred to it as a double-edged sword, as credit card use can help to demonstrate spending habits, but the increase in debt levels also shows that the economy could be balancing right on the edge.
Why is this happening?
Analysts have pointed out that some people get in the habit of using their credit cards and accidentally run up unmanageable levels of debt. They note that consumers need to make a budget and pay close attention to how much they spend. Ideally, paying off a credit card at the end of the month avoids interest payments.
But massively rising levels of debt, along with rising delinquency rates, show that the economy may not be as strong as some would hope. It could be that many people are unable to make ends meet and the only way that they can do so is by charging purchases on a credit card and hoping that they can figure it out in the future. Some of them undoubtedly will, perhaps by getting new jobs or reducing other debts. But there are also many who have no solutions when that money comes due, and so the interest causes the debt levels to compound and increase consistently.
At a time like this, it’s important for consumers to understand all the legal options they have. One of them may be to use bankruptcy to eliminate debt or reorganize their finances.