Holiday shopping fuels the return of credit card debt after a record drop in 2020
The average household's card balance is now $8,006, WalletHub found., 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. "The consumer landscape is starting to more closely resemble the pre-pandemic era," said Charlie Wise, head of global research and consulting at TransUnion. "With forbearance programs expiring and stimulus funds drying up, demand for credit is growing.", especially with the average annual percentage rate at more than 16%.
Eric Ellman, a senior vice president of public policy and legal affairs for the Consumer Data Industry Association, advises shoppers to be thoughtful about any new debt obligations that they take on this year. "When consumers get in over their heads, there are some obvious implications," he said. "Their credit scores could go down and that could increase the cost of future borrowing."
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