Mastercard credit card
Photograph ©2023 by Brian Cohen.

Credit Card Debt Exceeds $1 Trillion in the United States

This milestone has been reached for the first time.

Credit card debt exceeds $1 trillion in the United States for the first time, according to data which was released by the Center for Microeconomic Data of the Federal Reserve Bank of New York earlier today, Tuesday, August 8, 2023 — at a time when interest rates are the highest that they have been in 22 years.

Credit Card Debt Exceeds $1 Trillion in the United States

Discover credit card
Photograph ©2019 by Brian Cohen.

“Credit card balances increased by $45 billion, from $986 billion in Q1 2023 to a series high of $1.03 trillion in the Q2 2023, marking a 4.6% quarterly increase”, according to this official press release from the Federal Reserve Bank of New York. “Credit card accounts expanded by 5.48 million to 578.35 million. Aggregate limits on credit card accounts increased by $9 billion and now stand at $4.6 trillion.”

The combination of the inflation rate at 9.1 percent last year — which was the highest in greater than 40 years — and interest rates continually increasing has caused consumers to feel the pain financially. The inflation rate has eased considerably this year to three percent as of June of 2023; but that is of no immediate solace to consumers — especially those who are currently in debt — as the slowing of inflation does not necessarily correlate to prices on goods and services decreasing. Rather, that means that prices are increasing significantly slower in 2023 than they did in 2022 — but they are still increasing in general.

In fact, more citizens of the United States are withdrawing from their retirement accounts this year due to financial hardship to help pay for their debts — and that has alarmed some economists, as this trend can lead to insolvency and even bankruptcy.

Don’t Be Sold — Unless You Can Afford “Free” Travel

Hilton Honors American Express Aspire Card
Photograph ©2022 by Brian Cohen.

Many so-called “travel bloggers” rely on promoting credit card applications as a significant source of income; and some of them will do whatever they can to convince you to apply for a credit card through one of their affiliate links — including telling you that you can “travel for free”. Although there is technically nothing wrong with selling credit card applications and doing so is certainly not illegal, some of them will tell you how they traveled for a paltry sum of money on a trip that would have otherwise cost tens of thousands of dollars.

While that may be true, most credit cards have a minimum amount of spend to procure tens of thousands — or even hundreds of thousands — of bonus miles or points in addition to what you would normally earn. For example, you can earn 150,000 Marriott Bonvoy bonus points after using your new card to spend $6,000.00 on eligible purchases during the first six months, for a total of as many as 200,000 bonus Marriott Bonvoy points with the Marriott Bonvoy Brilliant American Express Card — but the application for this card must be received by tomorrow, Wednesday, August 9, 2023 to qualify for this offer. The annual fee is $650.00 for this card. The bonus is typically 95,000 Marriott Bonvoy bonus points.

If you can afford to spend a minimum of $6,000.00 within the first six months with the Marriott Bonvoy Brilliant American Express Card — as well as the annual fee of $650.00 — then you can certainly enjoy some time staying at a hotel or resort property which participates in the Marriott Bonvoy membership program, as the offer is a good deal…

…but even if you do not spend a dime on that stay, it is hardly free — especially if you were not planning on spending a minimum of $6,650.00 within six months — and that does not include opportunity costs.

Final Boarding Call

Empty pockets
Photograph ©2015 by Brian Cohen.

If you cannot afford to spend several thousand dollars within a few months and you still participate in an offer, then you will be paying interest on any balance that is not paid on time — and therefore be contributing to the mounting credit card debt in the United States.

No amount of miles or points is worth being in financial debt, in my opinion.

All photographs ©2015, ©2019, ©2022, and ©2023 by Brian Cohen.

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