How interest rates and inflation impact credit card debt
On an individual level, Americans carried credit card balances averaging $7,932 as of the end of 2023, per New York Life’s “Wealth Watch 2024” survey. That’s up from an average balance of $6,321 during the same time period in 2022.
While the majority of those in credit card debt are allocating the same or more money toward chipping away at their balances, nearly a quarter say they’re contributing less, per New York Life.
Debt holders say they put around $363 per month toward their credit card debt in 2023, slightly less than the $430 they paid monthly in 2022.
How interest rates and inflation impact credit card debt
One reason people are contributing less is due to record-high credit card interest rates combined with elevated prices for everyday goods, says Matt Schulz, chief credit analyst at LendingTree. Schulz is also the author of “Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life,” which will be released in March.
“It tells you that people are really struggling in the wake of stubborn inflation, rising interest rates and other financial headwinds that they’ve faced for several years,” he says. “People have less money to contribute to their financial goals like paying down debt.”
But putting less money toward paying down your credit card debt in the short term could cost you in the long term. That’s because, if you’re not paying off your bill in full, interest charges continue to
