US media- Americans have never been more worried about not being able to pay off their credit card debt

On October 16, CNN reported that the Federal Reserve Bank of New York released new statistics indicating a mixed financial sentiment among Americans. While many feel their jobs are secure and anticipate that their income and spending will remain above pre-pandemic levels, anxiety about rising credit card debt is becoming increasingly prevalent.

According to the report, American consumers are feeling more pressure regarding their ability to manage debts. Since April 2020, there hasn’t been a time when Americans were more concerned about meeting their minimum debt obligations. The New York Fed’s September Consumer Expectations Survey revealed that the average likelihood of respondents being unable to pay at least the minimum on their debts over the next three months has risen for the fourth consecutive month, reaching 14.2%. This figure is the highest monthly average since January 2017, aside from the early months of the COVID-19 pandemic.

Ted Rossman, a senior industry analyst at Bankrate, remarked, “Inflation is still a significant issue. Even though it has declined, I believe it remains the dominant theme in the economy.” He added, “Inflation has eroded much of the gains people have made. So, even if you are employed and your wages have increased, many still have a negative perception of their situation.”

Rossman emphasized that the cumulative effects of the current high inflation impact some Americans more severely than others, illustrating a growing disparity in income inequality. “For those with higher incomes and good credit scores, the outlook is quite positive. They still have access to substantial credit and are generally able to pay on time,” he noted. “However, for the other half who rely on credit cards for convenience and rewards, the situation may become more complicated, especially when considering potential long-term credit card debt.”

Research indicates that lower-income Americans are facing higher inflation rates. An analysis from the Federal Reserve Bank of Minneapolis, based on recent Bureau of Labor Statistics data, shows that since 2005, prices for the lowest-income households have surged by an average of 64%, while prices for the highest-income households have increased by 57%.

Furthermore, recent data from the New York Fed highlights a significant rise in delinquency expectations among those earning over $100,000, climbing from 6.4% to 8.4%. Meanwhile, for individuals earning less than $50,000, the anticipated likelihood of defaults has increased to 20%.