Household Credit Card Balances Climb, Testing the Resilient Consumer
Rising balances and high interest rates are straining some households even as overall spending holds up, a divide worth watching.
Americans' credit card balances have climbed to new highs, and with interest rates on that debt elevated, the trend is straining some households even as overall consumer spending remains resilient.
The rise partly reflects a growing economy and population, and balances relative to income remain within historical norms in aggregate. But averages obscure a widening divide between households that are comfortable and those that are stretched.
Uneven strain
Lower-income borrowers and younger consumers show more signs of stress, with delinquency rates on cards and auto loans ticking up from very low levels. For them, high interest rates turn carried balances into a heavy, compounding burden.
Financial counselors emphasize that card debt is among the most expensive a household can carry, and urge those with balances to prioritize paying it down. Balance-transfer offers and consolidation can help, used carefully.
A signal to watch
Economists watch card debt and delinquencies as an early gauge of consumer health. So far the aggregate picture is stable, but the rising strain among some borrowers is a reminder that a strong average can conceal real hardship at the margins.
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