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WalletHub Reports: Record Q3 Credit Card Debt & Cities with the Least Sustainable Debt

With inflation putting pressure on people’s budgets and raising concerns about a prolonged recession, WalletHub released its latest Credit Card Debt Study, Federal Reserve Rate Hike Report, and report on the Cities with the Most & Least-Sustainable Credit Card Debt to help illustrate how consumers are faring. You can find key highlights below.

Credit Card Debt Study Key Stats

  • Record Q3 Increase. Credit card debt increased by almost $39.6 billion during Q3 2022, an all-time record for the third quarter of the year.
  • Bigger-Than-Normal Buildup. Consumers’ Q3 2022 credit card debt increase was 2.4X bigger than the post-Great Recession average for a third quarter.
  • Record Annual Projection. WalletHub projects that consumers will end the year with roughly $110 billion more in credit card debt than they started with, which would be close to an annual record.
  • More Costly Debt. A Federal Reserve interest rate increase on December 14 would cost people with credit card debt at least an extra $3.2 billion in the next year alone. That’s on top of the $22.9 billion increase already caused by the Fed’s previous rate hikes this year.

Full study: https://wallethub.com/edu/credit-card-debt-study/24400

Most-Sustainable Credit Card Debt Least-Sustainable Credit Card Debt
Fremont, CA Hialeah, FL
San Francisco, CA Miami, FL
Irvine, CA Juneau, AK
San Jose, CA Port St. Lucie, FL
Jersey City, NJ Pembroke Pines, FL
Madison, WI El Paso, TX
Columbia, MD Norfolk, VA
Seattle, WA Knoxville, TN
New Haven, CT Gulfport, MS
Cedar Rapids, IA San Antonio, TX

Full rankings: https://wallethub.com/edu/cities-with-the-least-sustainable-credit-card-debt/86237

Fed Rate Hike Survey Key Findings

  • Fed Increases Affecting Wallets63% of Americans say their wallets have been affected by the Fed’s rate hikes this year.
  • Inflation Concerns. 2 in 3 Americans think inflation is going to be worse in 2023.
  • Elections Won’t Make a Difference. Almost 3 in 4 people think the recent elections will not help tame inflation.
  • Not Recession-Ready. 49% of Americans say they are not financially prepared for a recession.
  • Deflated Holiday Plans. 54% of Americans say inflation has affected their holiday plans.
  • Monthly Expenses Affected. 68% of people say inflation has affected their monthly grocery expenses the most, followed by gas (23%) and housing (9%).

Full survey: https://wallethub.com/edu/sa/fed-rate-hike-survey/48053

Q&A with WalletHub 
Are Americans’ finances in good shape heading into the holidays?
“Americans are stretched thin financially heading into the holidays. Consumers entered the fourth quarter of the year fresh off a record for most credit card debt added during the months of July, August and September – a whopping $39.6 billion. By year’s end, we can expect to have added a total of roughly $110 billion to our credit card debt tab during 2022,” said Jill Gonzalez, WalletHub analyst. “U.S. consumers have struggled with credit card debt for years, and this trend is only intensifying due to high inflation and Fed rate hikes.”
How is inflation affecting consumers?
“A new WalletHub survey found that 68% of people say inflation has affected their monthly grocery expenses the most, followed by gas and housing,” said Jill Gonzalez, WalletHub analyst. “Not only are we feeling the pinch of inflation in the supermarket, at the gas pump and on the home front, but it’s also throwing a monkey wrench into holiday traditions. According to WalletHub’s survey, 54% of people say inflation has affected their holiday plans this year.”
How do Americans feel about inflation right now?
“Americans feel pessimistic about inflation right now, according to a new WalletHub survey showing that two-thirds of people think inflation will be worse in 2023 and three-quarters of people believe recent elections won’t help solve the problem,” said Jill Gonzalez, WalletHub analyst. “Plus, inflation is making most Americans feel relatively poor this holiday season, which can make it harder to feel the holiday spirit.”

How are Fed rate hikes impacting people?

“WalletHub’s latest Fed Rate Hike Survey found that 63% of people say their wallets have been affected by the Federal Reserve repeatedly increasing its target interest rate this year,” said Jill Gonzalez, WalletHub analyst. “Rate hikes immediately hurt people with credit card debt, and Americans owe billions of dollars to credit card companies. Rate hikes have also increased the cost of new loans and appear to be a major contributor to the slowdown in the housing market.”

What advice do you have for people trying to get rid of credit card debt? 

“If you have good or excellent credit, try to take advantage of a 0% balance transfer credit card while the offers are still attractive,” said Jill Gonzalez, WalletHub analyst. “Right now, applicants with above-average credit can get a 0% introductory APR for 15 to 21 months, which could produce hundreds of dollars in savings. Such offers tend to dry up during a prolonged recession.”

Which cities are doing the best and the worst when it comes to credit card debt?

“Four California cities – Fremont, San Francisco, Irvine and San Jose – lead the way when it comes to the most sustainable credit card debt levels, according to WalletHub’s latest research,” said Jill Gonzalez, WalletHub analyst. “On the other hand, two South Florida cities – Hialeah and Miami – have the riskiest relationship with credit card debt right now.”  

This article was released by WalletHub.