WASHINGTON (NEXSTAR) – Americans' credit card debt has just hit a new all-time high of $1 trillion as a new report shows a surge in the number of people making emergency withdrawals from their retirement accounts.
The new data comes from the Federal Reserve Bank of New York, which says total U.S. credit card debt hit $1 trillion last quarter. Bankrate analyst Ted Rossman says this shows an increase in Americans' reliance on credit cards.
“We're definitely seeing more people carrying higher debt for longer periods of time,” Rossman said.
He says the trend isn't exactly surprising.
“We expect credit card balances to grow over time. Increased consumer spending driving strong economic growth, more card usage because cash is becoming less of a factor with each passing year, population growth,” Rossman said.
Also, the number doesn't differentiate between credit card balances that are paid off every month and those that aren't.
Bankrate reports that 53% of people pay off their credit card balances regularly.
According to LendingTree analyst Matt Schulz, the problem lies with those who ultimately bear the debt.
“Persistent inflation and rising interest rates have caused a lot of people to get caught in this debt cycle,” Schulz said.
Bank of America also reported an increase in the number of people making emergency withdrawals from their 401,000 retirement accounts. While Schulz says that sometimes people do what they have to do to make ends meet, it's not usually recommended.
“The opportunity cost of doing this is so high because it's money that can't earn compound interest for 25 to 30 years,” Schulz said.
While both experts say the overall economic picture is not bad, the new figures suggest that most people's personal finances are unstable.
“A lot of people are close to the edge. I mean, even a lot of higher-income households live paycheck to paycheck,” Rossman said.
Schulz believes that the resumption of student loan payments will also have a significant impact on many families.
“The average person's financial leeway in their budget is pretty small, even before those payments had to restart,” Schulz said.
He says people with debt have options to help them pay off their debt faster.
Schulz recommends looking into 0-rate balance transfer cards or asking your bank for a lower interest rate on your card. A recent study by Lending Tree showed that most people who ask for it get it.
