Holiday shopping returned with a vengeance this year. But going into debt is one gift you can’t return.
After Americans paid off a record $83 billion in credit card debt in 2020, helped by government stimulus checks and fewer opportunities for discretionary purchases, credit card balances are heading higher once again.
Overall, credit card balances rose by $17 billion in the third quarter of 2021, according to the most recent data from the Federal Reserve Bank of New York.
In the fourth quarter, fueled by the return of holiday plans, consumers charged billions more.
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By the end of the year, Americans are now on track to end up with $70 billion more in credit card debt, according to a projection by personal finance site WalletHub.
The average household’s card balance is now $8,006, WalletHub found.
Balances are expected to continue to rise in 2022, ending the first quarter as much as 10% higher than a year ago, as more consumers apply for credit and increase their spending, according to a forecast by TransUnion. Usually, card balances decline in the first months of the year as borrowers pay off their holiday spending.
By the fourth quarter of 2022, total balances are expected to reach $805.7 billion, TransUnion found — the highest level since the start of the Covid-19 pandemic.
