US Credit Card Spending is Out of Control…

US Credit Card Spending is Out of Control…

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Hey credit Warriors welcome to the show And in this video I want to talk about America's $1 trillion credit card bill Now on this channel I recommend the Disciplined use of credit cards paying Them off every month in order to earn Cash back and rewards to have luxury Travel experiences but there comes a Time when I feel I have to offer a Little Public Service Announcement about The dangers credit cards can pose when Your spending is outpacing your earnings And that time is now American now carry More than $1 trillion in credit card Debt going into the holiday shopping Season the Federal Reserve rate hikes Have caused average interest rates for Credit cards to spike to more than 22% Rates on retail credit cards are even Higher nearing 29% on average so CNBC Came out with a piece called how America Racked up a $1 trillion credit card bill Looking at how credit card debt is now At an all-time high I want to play some Sections of that video and provide some Further analysis so first of all let's Look at the amount of of credit card Debt we have right now $ 1.79 trillion As of the end of quarter 3 2023 and an Alarming thing that CNBC pointed out in Their video is this typically after the Holiday season credit card debt levels Dro as consumers pay down their shopping Balances but at the start of 2023 it

Remained unchanged now what they mean by That is what you can see here on this Chart you can see in the first quarter Of 2022 after the holiday shopping Season people paid off their credit Credit card balances and balances Dropped from 856 billion down to 841 Billion this is a trend we see every Year the year before that it was even More pronounced except in 2023 it didn't Happen and credit card balances stayed Exactly the same at 986 billion the Reasoning behind this is that covid Funds that were flooding the economy are Finally drying up and inflation which Peaked at 9% in 2022 has made everything More expensive I people spent more than Ever on Christmas presents in 2022 but This time struggled to pay it back and That brings us to the 2023 holiday Season where credit card debt has topped $1 trillion the end of the third quarter Of 2023 inflation is still above the Fed's 2% Target and on top of that Federal student loan repayments have Restarted as of October this year after Being paused for 3 years during the Pandemic we still don't have the figures For credit card spending in quarter 4 of 2023 since we're still in 2023 but Several card issuers such as Chase Etc Have said that it is consistent with Previous years which means that it will Take credit card balances above their

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Quarter three level of $1 trillion Shoppers have also been surveyed on Their spending plans holiday Shoppers do Plan to spend more according to a survey And the forecast done by the national Retail Federation we then have to see Whether people pay those balances down In quarter 1 of 2024 and if they don't They they will be paying a higher Interest rate than in previous years the Most common answer to a bank rate survey About 2024 financial goals was paying Down debt and this is really important Because delinquencies have started to Rise hitting their highest level since 2012 according to Federal Reserve data It's a perfect storm of factors that Could lead to significant problems in 2024 and actually we already see this Happening big box retailers like Macy's And Nordstrom already flagged the slow Down repayments on their credit cards Over the summer before we look at how Much credit card debt the individual Consumer has I want to tell you about an App that may help you better monitor Your credit card spending and that is Max rewards the sponsor of today's video It links to all of your credit card Accounts even if they are from different Issuers and displays all of your Transaction data from all of your Different cards in One dashboard so that You can keep track of all your balances

Your credit utilization on each card and Across all of your cards and and also Never miss a bill the app will also tell You which card to use in which category And at which local Merchant to earn the Maximum rate of cash back or rewards if You're into using AMX offers to save Money the Gold version of Max rewards Activates all of your AMX offers for you Automatically so you never miss a deal You can get a free month of Max rewards Gold with my link below or just download It and check out the free features so CNBC then goes into how much credit card Debt the average consumer has the Average consumer has around A6 ,000 Credit card balance $4 to $600 monthly Student loan payment high rent and car Loan payments that $6,000 figure is a 10-year high and credit card companies Are raking in the profit because of it Making 105 billion off of interest in 2022 and 25 billion from fees this is Due to higher interest rates caused by The FED raising rates the 20123 figures Should be even higher now the Consumer Finance Protection Bureau is trying to Take steps apps to help such as a new Rule that they are trying to finalize With the White House to lower credit Card late fees to just $8 in my opinion That will do little to help late fees Only made up 14.5 billion out of a total Of 130 billion of interest and fees paid

In 2022 and it will simply reduce the Consequences of paying late and more People will probably pay late as a Result and the credit card companies Will make more money in interest and You'll see more delinquencies as well Then there is also a very short simple Bill in the Senate introduced by Josh Hy Called the capping credit card interest Rates act which seeks to cap interest Rates at 18% in my opinion this would do More than decreasing late fees if it can Pass in 20124 however it will decrease Profits made by credit card companies so You may see them cutting other perks Like Rewards or airport lounge access or All of the sort of things that we kind Of like on this channel so you know you Can't do anything without having an Adverse effect as well and also guys you Can't just wait for external factors to Change and so I think at this time America perhaps needs to take a bit of Advice from Dave Ramsey Let's do an Onair plastic surgery right now we're Just going to start chopping up cards Now maybe I personally am not that Extreme but it is time to really look at Our spending and make sure we have a Balanced budget using a budgeting app or A credit card monitoring app like Max Rewards can really help you see when all Your bills to Due so that you can pay Them on time see all your credit

Utilization across all your accounts Even if they're from different issuers And also your total points and cash back Balances as well so if it really comes Down to it and you've gotten yourself Into trouble on credit cards you can Actually use your points or cash back to Pay off the balances on your cards not a Popular option in my opinion since Points can be worth much more when Redeemed for travel but hey it could Help you out if you're really in trouble You can also consider opening a balanced Transfer card with a 0% interest rate For for a period of time for example 12 Months 15 months Etc there are many out There on the market and then what you do Is you transfer your high balances over To that card so that you can pay off Those balances quicker since your entire Payment is going towards the money you Owe not towards interest the FED will Likely start to lower interest rates by March next year so we will likely see Credit card interest rates start to come Down too which will take some pressure Off of credit card borrowers if you have Gotten yourself into trouble with this My heart goes out to you but don't Despair I'll put on screen now some Videos that I made in the past about Ways of paying off credit card debt and Also balance transfer cards also check Out Max rewards in the description below

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To get a full picture of your credit Card finances don't go and get the paid Version if you're in debt the free Version has a load of free features that Could be very useful to you please leave Your comments down below I'd love to Know what you think about the personal Finance Outlook in 2024 maybe I'm being A little bit too pessimistic I don't Know let me know what you think please Subscribe to the channel for more videos Like this on Personal Finance credit Cards and luxury lifestyle every couple Of days we'll see you next time bye-bye

The Credit Pros

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About the Author: James


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