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US credit card debt hits $1 trillion for the first time
Credit card debt for Americans surpassed US$1 trillion for the first time at the end of June, raising concerns over household disposable income.
According to a report published by the New York Federal Reserve, Americans are increasingly turning to credit cards to cover everyday expenses such as food, drink and the cost of running cars.
In the three-month period from April 2023 to June 2023, total credit card debt in the US soared to US$1.03 trillion, up a staggering US$45 billion (or 4.6%) from the previous quarter of this year.
The new data marks the highest level on record since monitoring began in 2003.
With the average American owing US$5,000 in credit card debt, current APR levels mean it would take around 277 months and US$7,723 in accrued interest to pay off the debts, if minimum payments were made.
However, despite the seemingly concerning figures, disposable income (the amount a household has to spend or save after paying taxes) in the US rose by 0.23% in June 2023 compared with the previous month, according to Statista Research.
Disposable personal income is a significant indicator of an economy’s health, and determines an individual’s ability to consume goods and services, such as alcoholic beverages.
According to the US Bureau Of Labor Statistics, the average personal annual income in the United States is $56,940, and the average combined household income is $87,862, with residents of the district of Columbia earning the highest salaries.
In June 2022, the average US consumer was spending $34 per month on alcoholic beverages, as per data from Morning Consult. The equivalent 2023 data is yet to be released.