How America Racked Up A $1 Trillion Credit Card Bill

Americans have accumulated a record-breaking $1 trillion in credit card debt.

This comes as the Federal Reserve's interest rate hikes have caused average interest rates for credit cards to spike to more than 22%. Rates on retail credit cards are even higher, nearing 29% on average.

Despite rising costs and higher borrowing rates, a record number of consumers shopped over the Thanksgiving holiday weekend. The National Retail Federation found that more than 200 million consumers hit the stores that weekend, a few more million than the 196.7 million shoppers who turned out in 2022.

However, big box retailers like Macy's and Nordstrom have issued warnings about a slowdown in repayments on their credit cards over the summer, highlighting a potential risk to retail revenue this holiday season. The resilience of the American consumer will continue to be tested by the still-rising costs of groceries, gas and housing. And, not to mention, the return of student debt payments.
Watch the video above to find out more about how Americans' credit card debt ballooned past the $1 trillion threshold, and whether U.S. consumers can keep spending enough to keep a looming recession at bay.

Chapters:
0:00 Introduction
1:11 Ch 1. $1 trillion dollar credit card bill
2:45 Ch. 2. Holiday spending
4:04 Ch. 3. What’s next?

Produced and Edited by: DeLon Thornton
Reporting by: Paulina Likos and Melissa Repko
Supervising Producer: Jeff Morganteen
Additional Footage: Getty Images

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How America Racked Up A $1 Trillion Credit Card Bill

[barttfisher]

First off, the belief that the Federal Reserve would stop raising interest rates was the driving force behind the entire economic chaos. What should we do now that we have a situation where interest rates are crashing? At this point, how would you suggest that I safely allocate $300k?

[HodgeChris]

Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?

[Rhgeyer]

We are a 6 figure income couple and had very little saved and not much cash lying around the preverbal".
'...don't have $500 for an
emergency" that was us. The big thing was debt all kinds of it, cars mortgage (although our home isn't a high price one), student loans for our kids, and of course credit cards.
One day we just got sick of being broke and went total scorched earth and became frugal overnight. Paid it all off, it took almost 5 years but now we have no debt and this year our savings rate is 50% on basically the same income that had us perpetually broke. So for us it is mainly staying out of debt and watching our spending, at first it was a real effort to save in our HISA and 401Ks but now it's actually fun watching our money grow. No car or vacation or neighborhood is worth being broke or financially unstable.

[JefferyDuns]

The U.S. economy relies on ongoing credit and debt generation for sustenance. The Federal Reserve is expected to increase the money supply, leading to further debt accumulation for the average American. Meanwhile, foreign nations continue to desire the U.S. dollar, despite their own economies facing significant challenges, some even worse than that of the U.S. This situation raises concerns about who will ultimately bear the consequences of these economic dynamics.

[kkk]

I believe social media made this worse. Too many people “try” and act rich to impress people no one cares about them.

[stephanied]

I’m spending no more than $200 on Christmas gifts. If people are upset with small gifts, then they might not be people I need to spend time with.

[arpitjain]

If you carry credit card debt you are only hurting yourself! 20+% interest is stealing your future from you

[shellylofgren]

The financial sector and derivatives may have a Hindenburg moment if the US Treasury market collapses. Rising market illiquidity in the $14.8 trillion U.S. Treasury market, according to Bank of America, might affect other financial markets.

[jacobsontukua]

The idea that people are planning to spend money they cannot afford to spend is crazy to me.

[plr]

When I was 22, I was fortunate to work at Citibank in customer service in their credit department. It opened my eyes to the industry. Credit cards exist as a service, yes, but they are also a responsibility that the customer is bound to contractually. The banks issuing credit cards actually profit from irresponsible users with late fees and interest rate hikes, and are happy when people screw up. Even if the money is not paid back to the crediting bank, some of the loss is insured, and the rest of the debt can be sold off to debt collection agencies. That's the nature of the business, and it's dirty.

[SupermanHopkins]

Doesn't help that consumers are paying ~40-50% of their take-home pay on housing. That leaves you about 50% of your net pay for groceries, utilities and literally everything else.

When you're facing a pit that large, you'll reach out for whatever "help" is out there. Here come the credit card defaults. 😢

[duaynecollins]

I paid off my last credit card a year ago. I refuse to ever let myself fall into that trap again. I’d rather go bumming on the street corner than get a credit line.

Edit: so I’m catching a lot of flak. Yes I’m aware that I’m the problem not the credit card itself. For those that are responsible, credit cards are a good thing. Getting that cash back is the bomb. However I’m not responsible. I have bad depression and got into the bad habit of buying things to make myself feel better. Bad idea.

[jbarkley]

My credit score dropped because I haven’t used a credit card for years after it was paid off. What a joke of a system 😂

[landonbrown]

Living above your means is the American way

[chrisguevara]

I'm guessing "resilience" is referring to spending habits not the ability to survive an emergency (having financial impact)

[jbb]

Said this before on a related video and ill say it again. Credit cards are not bad nor are they the issue. People and their uncontrollable spending habits are. Aside from the small minority that go into credit card debt because of a real necessity, most get there because of frivolous spending and spending well beyond what they can repay and they knows this but choose to ignore it

[LouisianaHuff]

In every crisis, an opportunity arises, as the saying goes. The 2024 recession, though challenging, offers unique ways to build wealth. Following Warren Buffet's advice to be cautious when others are greedy and bold when they are fearful, investing in undervalued assets like stocks, digital assets, real estate, or businesses during the downturn can lead to substantial returns in the economic recovery. Aligning with Robert Kiyosaki's wisdom, it's not just about making money but investing wisely. Prioritize financial education, cut unnecessary expenses, and leverage emerging opportunities.

[LesterDiaz]

Credit cards can be a powerful tool if used correctly. I dont spend money on my cards I don’t have in my bank account and I only get credit cards with rewards and benefits paying the full bill at the end of the month.

[kortni_animations]

We pay our cards monthly with no interest. And this holiday season, we're spending time, not money, on each other ❤

[YavuzDemir-jjux]

Love the PbatesLTD content. I think this project is just as essential as HBAR and they both will be great movers