Economic Collapse Network's article by Michael Snyder on May 15, 2024
Did you know that the debt of American households has reached $17.690 billion? Of course, household debt is only part of the larger problem. The federal government is $34 trillion in debt, state and local governments are inundated with debt and unfunded liabilities, and corporate debt is at an all-time high. As a society, we are in the midst of the worst debt spree in the history of the world, and the situation is getting worse every year. Previous generations have given us an economic system that has provided us with an extremely high standard of living, but we always want to have more. So we've been borrowing and spending with no end in sight, and now, our reckoning day is fast approaching.
According to the New York Fed, U.S. household debt hit a new high in the first quarter of this year.
In the first three months of 2024, total household debt surged to a new record of $17.69 trillion, an increase of $184 billion, or 1.1%, from the previous quarter. The increase was largely due to a surge in mortgage balances, which stood at $12.44 trillion at the end of March, up $190 billion from the previous quarter.
If we can take care of all these debts, there will be nothing to worry about.
Unfortunately, delinquency rates are rising.
In fact, the percentage of severely delinquent credit card balances has risen to its highest level since 2012...
Data released by the New York Fed on Tuesday showed that more Americans are defaulting on their monthly credit card payments because they are still battling high inflation and high interest rates.
Credit card delinquency rates have already surpassed pre-pandemic levels and continued to rise during the three-month period from January to March.
In the first quarter, the credit card debt delinquency rate reached 8.9% on an annualized basis, compared to 8.5% in the previous quarter and 5.87% at the end of 2023. In fact, the proportion of severely delinquent credit card balances climbed to its highest level since 2012.
In 2012, we were just emerging from the Great Recession.
Now, a new economic crisis has begun, and millions of American families are teetering on the brink of financial catastrophe.
If you use a credit card, it's important to make full monthly payments.
Unfortunately, about 44% of cardholders fail to do so......
Total credit card balances in the first quarter of this year were $1.115 trillion, $129 billion more than the same period last year. This is not a problem for credit card users who pay their balance in full each month. However, according to Bankrate, about 44% of borrowers are saddled with credit card debt every month.
Having credit card balances every month has always been a form of financial suicide, and even more so nowadays because interest rates are ridiculously high......
The rise in credit card usage and debt is particularly worrisome, as interest rates are ridiculously high. According to Bankrate data from 1985, the average annual percentage rate (APR) on credit cards reached a new record of 20.72% last week. The previous record was 19 per cent in July 1991.
If people are saddled with debt to compensate for rising prices, they may end up paying more for items in the long run. For example, if you owe $5,000 in debt (which is exactly $5,000 on average), the current APR means that you will need to spend about 279 months and $8,124 in interest to pay off the debt with the minimum payment.
I always encourage readers to pay off high-interest debts as soon as possible.
If you have credit card debt, paying it off should be your primary financial goal.
Sadly, the New York Fed's latest report tells us that more and more Americans are defaulting on their credit cards and auto loans......
The Federal Reserve's report showed that 6.9% of credit card debt turned into serious delinquencies last quarter, up from 4.6% a year ago. Among credit card holders aged 18-29, 9.9% of balances are in serious arrears.
Auto loan delinquencies have also risen, as the average monthly auto payment will jump to $738 in 2023. Currently, nearly 2.8% of car loans have been in arrears for 90 days or more, which is equivalent to more than 3 million vehicles. Auto loans are the second largest debt category after mortgages, with $1.62 trillion in outstanding debt.
Tens of millions of American households have severely overdrawn their finances.
When you're in debt and can barely make your minimum payments, you feel like you're "stuck" and have no way out......
High interest rates are pushing low- and moderate-income Americans who default on credit card payments and car loans to the brink of a new report shows.
Ola Dorsey, a 43-year-old veteran, told The New York Times: "It's crazy. It's really hard to get out of debt. It seems like you can only pay interest. ”
Chris Nunn, 31, a driver for the DoorDash food delivery app, told The New York Times, "We didn't have credit to buy a house and had a whole bunch of debt, either student loans or credit card debt. So we're stuck."
Dorsey told the outlet that she has been working for years to reduce the debt she has accumulated due to various health issues. In order to reduce her huge debt, she worked three jobs.
Today, Americans are more pessimistic about the economy than they expected for a long time.
Working so hard and still not having enough money to pay all the bills is absolutely devastating.
If you're feeling a lot of stress about your finances, you're certainly not alone.
According to a recent survey, about half of people struggle with mental health issues because of financial stress......
About half of U.S. adults struggle with mental health issues due to their financial situation.
According to Bankrate's latest Money & Mental Health Survey, 47% of adults say worries about money can cause anxiety, stress, worrying thoughts, insomnia, depression or other effects at least occasionally.
About 65% of them said they were most worried about inflation and rising prices, and nearly 60% said their stress came from paying daily expenses such as daily necessities and utilities. According to the survey, about 56 percent of people say they are worried about whether they have enough emergency savings, and 47 percent are most worried about debt.
After seeing such figures, how can anyone in the world say that the US economy is in good shape?
The level of economic pain we have already witnessed is absolutely staggering, and it will only get worse in the chaotic years ahead.
But while our leaders continue to make one incredibly reckless decision after another, many remain convinced that everything will somehow work out smoothly.