Americans are sinking deeper into financial struggles with a whopping $1.1 trillion in credit card debt, and a record number also cannot afford their rent.
Credit card debt jumped by $50 billion in just the last quarter of the year, 4.6% more than the previous quarter, according to data released Tuesday by the Federal Reserve Bank of New York.
Credit card debt first hit a trillion dollars in August.
Missed credit card payments are also rising among all age groups, especially people in their 30s, the data shows.
“In the case of credit cards, it looks like things have reverted to a level that is worse than pre-pandemic,” New York Federal Reserve researchers told reporters on a call Tuesday.
Inflation and spiking rents are driving credit card debt.
The total household debt also jumped $212 billion up to $17.5 trillion in the last quarter of the year.
Another factor of debt is rising car prices — used cars and new cars are much more expensive than before the pandemic.
Car loans rose by $12 billion in the last quarter of the year, hitting $1.61 trillion. Delinquencies on those loans also increased.
Meanwhile, more Americans than ever are spending a significant portion of their income on rent.
A record 22.4 million renters, about half the country’s renters, were spending more than 30% of their income on rent and utilities in 2022, according to a report released earlier this month by Harvard’s Joint Center for Housing Studies.
The rental market is now cooling, but rent prices are still much higher than pre-pandemic, and wage growth has not kept up.
Median weekly wages grew only 1.7% between 2019 and 2023, government figures show.
People earning between $45,000 and just under $75,000 a year saw the most significant increase in newly “cost-burdened” renters, according to the report.
“So you can certainly imagine the kinds of tradeoffs that have to happen,” Whitney Airgood-Obrycki, a senior research associate at the Harvard center, told ABC News.
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“Cost-burden renters are spending less on things like food and health care and retirement. So, there are significant implications for the long-term well-being of these households,” Airgood-Obrycki said.
At the same time, homelessness is also on the rise.
About 653,000 people reported being homeless in January of last year, the Harvard report found.
That’s up about 12% from the same time the previous year in 2022, the largest single-year increase ever recorded, the report says. About 71,000 more people were homeless last year than the year before.
Even more striking, last year’s number was about 48% higher than the homeless population in 2015.
