Americans' Credit Card Debt Hits A Record $1 Trillion
Breaking down the increasing debt load and what it means
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🎙The Mo News Podcast: Talking about what the Ohio special election results mean, a big change coming to your iPhone, and why some bosses don’t want to hire Gen-Zers.
🗞 AMERICANS HAVE $1 TRILLION IN CREDIT CARD DEBT
If you have been looking around and wondering how people can afford their European vacations or Taylor Swift concert tickets, there’s a good chance they’re charging it to their credit cards and not paying it off!
For the first time ever, Americans’ credit card hit an unwelcome milestone: balances surpassed $1.03 trillion dollars, up nearly 4.6%, according to data released Tuesday by the Federal Reserve Bank of New York.
BTW, we’re not talking about a credit card balance, which is the amount currently owed to a credit card company. It’s the remaining balance at the end of the billing cycle that’s carried over to the next month, which incurs those high interest charges.
BY THE NUMBERS
Here is the Fed’s full report. Looking at some of these numbers, Americans have a…
1. Record $17.1 trillion in household debt
2. Record $12.0 trillion in mortgages– that’s more than double the 2006 peak.
3. Record $1.6 trillion in auto loans
4. Record $1.6 trillion in student loans
5. Record $1.0 trillion in credit card debt
More than 1 in 3 Americans have more credit card debt than savings.
An analyst from LendingTree tells CNN Business: “Unfortunately, it’s only going to go up from here… What’s driving it is inflation, higher interest rates and just generally how expensive life is in 2023.”
TIMING IS EVERYTHING
It’s important to mention that this comes as interest rates have hit a 22-year high, making it more expensive to pay off that debt. Credit card interest rates hit a record 25% and mortgage interest rates just hit 7.1%.
BY AGE
The average American carried around $5700 in credit card debt as of June.
Those between 40-49 hold an average of $7,600 in debt, the most of any group, followed by 55-64 year olds.
Gen Z has smallest amount, less than $2,900 in debt.
ECONOMIC CONFUSION
One the one hand, the job market is strong, the economy is growing, and consumer spending is increasing. This is important because consumer spending makes up 2/3 of the US economy.
On the other hand, stubbornly high inflation and rising interest rates are hurting consumers and putting them further into debt.
Bank of America reported that more people were tapping their 401(k) accounts because of financial hardship.
✔︎ Mo News Reality Check: Americans actually paid off nearly $200 billion in credit card debt in the early days of the pandemic with the help of those government checks, but it’s been going back up since then.
Most analysts say things could get even worse when student loan payments restart this fall. Remember, student loan payments are set to resume in October for the first time since 2020.
This is all part of why— despite the strong jobs numbers and the strong numbers from Wall Street— a lot of people tell us they’re still not feeling great when it comes to the economy and their own finances.
⏳ SPEED READ
🚨 NATION
📌 Ohio voters soundly reject Issue 1 scoring win for abortion rights supporters (THE COLUMBUS DISPATCH)
📌 Supreme Court gives rare win to gun control advocates, allows ATF to enforce "ghost gun" rules for now. (CBS NEWS)
📌 Is it cheaper to refuel your EV battery or gas tank? We did the math in all 50 states. (WASHINGTON POST)
📌 Early Puberty soared during the Pandemic, and scientists don't know why. (TIME)
🌎 AROUND THE WORLD
📌 Fears over Antarctic sea ice as yearly ozone layer hole forms ‘very early’. (THE GUARDIAN)
📌 Amazon nations launch alliance to protect rainforest (AL JAZEERA)
📌 US Embassy in Haiti closes after gunfire erupts nearby (THE HILL)
Pink Barbie coffins: Funeral home in El Salvador takes movie mania to next level (AP)
📱BUSINESS & TECHNOLOGY
📌 Apple is planning to move the button to hang up a call in new iPhone software (CNBC)
📌 Anheuser-Busch is selling 8 of its beer brands as Bud Light drama plagues its business. (THE STREET)
📌 40% of business leaders think recent Gen Z college graduates aren't prepared to enter the workforce, new survey says — and some said they won't even hire them. (INSIDER TODAY)
🎬 SPORTS & ENTERTAINMENT
📌 Made in America Festival, With Headliners Lizzo and SZA, Canceled Due to “Severe Circumstances”. (HOLLYWOOD REPORTER)
📌 Tory Lanez sentenced to 10 years in prison for shooting Megan Thee Stallion in the foot outside Kylie Jenner’s house (NBC NEWS)
📌 Billy Porter says he has to sell his house because of strikes: ‘You’ve already starved me out’ (LA TIMES)
📌 Trump blames wokeness, Biden for loss of US Women’s Soccer team at World Cup (USA TODAY)
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🗓 ON THIS DAY: AUGUST 9
1930: The cartoon character Betty Boop by Max Fleischer made her first appearance. The caricature of a Jazz age flapper, her image became one of the best-known cartoon characters in the world.
1945: The second atomic bomb dropped on Japan by the United States in World War II was dropped on the city of Nagasaki. The Japanese Emperor surrendered 6 days later.
1969: American actress Sharon Tate and four others were murdered by followers of Charles Manson, leader of a communal religious cult known as the “Family.”
1974: President Richard Nixon resigns from office. Gerald Ford takes oath of office.
The Mo You Know: Nixon resigned at noon, but what many people don’t know is that he spent time in those 24 hours on the presidential yacht. Yes, that used to exist. Carter sold it off as a way to save money and make the presidency look less ‘imperial.’ It’s currently in private hands and being refurbished.
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