News/Commentary

Bidenomics: Credit card debt set to hit a record high

February 6, 2024 | | Print Article

Facing ongoing inflation and rising interest rates, Americans struggling under President Joe Biden’s economic policies are facing record-high credit card debt as well.

“The New York Federal Reserve Bank’s Quarterly Report on Household Debt and Credit, slated for release on Tuesday morning, is expected to show that credit card debt hit a new record during the three-month period from October through December, smashing a previous high of $1.08 trillion, according to Matt Schulz, chief credit analyst LendingTree,” Fox Business reported.

Despite what the president claims as he touts “Bidenomics,” the rising cost of everyday necessities has forced many to turn to credit cards for meeting basic needs.

“I’d be surprised if credit card debt didn’t go up in the fourth quarter, and possibly by a good amount,” Schulz told Fox Business. “Because historically, we’ve seen that the biggest quarterly increases each year has been [in the fourth quarter].”

“Holiday spending certainly plays a role, no question about that. But also, life was expensive in 2023, and continues to be in 2024,” Schulz said. “So I’m sure that inflation and rising interest rates are playing a significant role. As prices rise, a lot of people lean on credit cards as a kind of de facto emergency fund.”

“While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains well above the Federal Reserve’s 2% goal. Additionally, when compared with January 2021, shortly before the inflation crisis began, prices are up a stunning 17.6%,” Fox Business reported.

“Food prices are up 33.7% from the start of 2021, while shelter costs are up 18.7%, according to FOX Business calculations. Energy prices, meanwhile, are up 32.8%,” the outlet added. “The average credit card annual percentage rate, or APR, is at a high of 20.74%, according to a Bankrate database that goes back to 1985. The previous record was 19% in July 1991.”

“You have these noticeable pockets of consumers — mostly middle- and lower-income renters who have not benefitted from the wealth effect of higher housing prices and stock prices — who are feeling financial stress and that’s driving up these delinquency levels. They’ve been hit very hard by inflation,” Warren Kornfeld, a senior vice president at Moody’s, said, according to the Associated Press.

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Frieda Powers
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