Credit card balances jump 13%, highest leap in over 20 years. To bridge the gap, more consumers are relying on credit cards to get by, which has helped propel total credit card debt to $890 billion.
Overall, credit card balances rose 13% in the second quarter of 2022, notching the largest year-over-year increase in more than 20 years, according to a report from the Federal Reserve Bank of New York.
Even so, balances remain slightly below their pre-pandemic levels, after sharp declines in the first year of the pandemic.
An additional 233 million new credit accounts were opened in the quarter, the most since 2008.
Consumers don’t feel ‘financially secure’ for a recession
In an effort to cool down the economy, in July the Federal Reserve hiked its target federal funds rate by 0.75 percentage points a second consecutive time.
Amid fears of a recession and rising interest rates, more than half, or 56%, of consumers said they are already seeing their standard of living declining, according to a recent report from digital wealth manager Personal Capital.
Even more, roughly 69%, think their income isn’t keeping up with inflation and fewer than half said they feel “financially secure enough” for another recession, according to the survey, which polled over 2,000 adults in April.
Americans now say they need to be making about $107,800 a year to feel “financially healthy,” roughly double the national average but down 13% in the past six months, the report found.
