The US economy is facing a difficult situation as the rate of credit card delinquencies has risen to its highest level since the 2008 financial crisis. This is due to an increasing number of Americans struggling to pay their credit card debts. The combined credit card debt in the US has reached a record high of $1.031 trillion in the second quarter of 2023.Young adults are particularly affected, with delinquency rates for those aged 18-29 rising to 8.3% in the first quarter of 2023 from 5.1% a year ago. The default rate for those aged 40 and above is slightly lower at 5%.The inability to pay credit card debts has a negative impact on the economy. Financial institutions incur losses, reducing their ability to extend credit to deserving borrowers. This in turn reduces consumer spending, a key driver of economic growth.The situation is unlikely to improve soon, as interest rates and inflation continue to rise. Connecticut, New York, and New Jersey have the highest average credit card debt, with the average slightly above the $8000 mark.
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | negative |
| Relevance Score | 8 |
| People | None |
| Companies | Moody’s Investors Service, LendingTree, Axios, Game of Trades, None |
| Currencies | None |
| Securities | None |
