Holiday Season Spurs Record $1.08 Trillion Credit Card Expense, Prompting Concerns Over Financial Stress

As the holiday season approaches, Americans face a record credit card expense, surpassing $1.08 trillion, driven by robust consumer spending and GDP growth, raising concerns about persistent financial stress. (Photo: abcactionnews)

Holiday Shopping Surge Raises Alarms Over Mounting Credit Card Expense and Financial Stress for Americans

According to source, as the holiday season approaches, Americans are grappling with a record credit card expense, reaching a staggering $1.08 trillion, according to a report from the Federal Reserve Bank of New York. The surge in credit card expense, up by $154 billion year over year, is driven by strong consumer spending and GDP growth, with rising delinquency rates noted across various income groups and regions, especially among millennials and those with auto or student loans.

The fourth quarter, marked by holiday shopping, is likely to see increased credit card expense, raising concerns about persistent credit card expense and financial stress for consumers. Dave Willis, president and CEO at Tinker Federal Credit Union, notes that the habit of using credit cards intensifies during the holidays, contributing to harmful patterns, especially as more individuals rely on them for everyday expenses like groceries.

A growing number of cardholders are carrying balances, falling behind on payments, and experiencing a higher percentage of balances going delinquent for over 180 days, as reported by the Consumer Financial Protection Bureau. Economic challenges, such as underemployment and increased living costs, compounded by the surge in borrowing costs, are leading more people to live off their credit cards.

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Rising Living Costs Drive Surge in Credit Card Expenses, Prompting Concerns Over Monthly Balances and Holiday Spending Stress

Despite receiving pandemic stimulus money, individuals are grappling with rising living costs and potentially reduced income, leading to a greater reliance on credit cards. The rising credit card expense is evident in a LendingTree survey, where nearly two-thirds of cardholders admit to not paying their balances in full monthly.

The stress of holiday spending is affecting 71% of Americans, as revealed in a survey by D.A. Davidson & Co., with 40% of credit-card owners carrying higher balances than the previous year. Financial experts emphasize the importance of budgeting, strategic credit card use, and careful consideration of credit card expense rewards to avoid falling into credit card expense traps.

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