WalletHub Reports: Record $180B Rise in Credit Card Debt in 2022 + Fed Rate Hike to Cost $3.4B & Cities with the Biggest Debt Increase

With household finances already under pressure and the Fed releasing its G19 report yesterday, the personal-finance website WalletHub released new reports and surveys highlighting additional hurdles to watch out for.

WalletHub’s Credit Card Debt Study found that consumers racked up a record $180.3 billion in new debt during 2022, and WalletHub’s Fed Rate Hike Report revealed that the interest rate increase expected on March 22 will cost people with credit card debt an extra $3.4 billion over the next 12 months.

See the full breakdown of how credit card debt increased by city.

Credit Card Debt Study Key Stats

• Consumers racked up a record $180.3 billion in credit card debt during 2022. The average annual increase in credit card debt over the past 12 years is just $47.8 billion.
   
• Credit card debt rose by $85.8 billion during Q4 2022 – the biggest quarterly increase recorded to date.
   
• The average household credit card balance was $9,990 at the end of 2022 – $2,015 below WalletHub’s projected breaking point for household finances.
   
• The best balance transfer credit cards currently offer 0% APRs for the first 12-21 months with no annual fee and low balance transfer fees.

 
For the full results, visit WalletHub’s Credit Card Debt Study.

Credit Card Debt Survey Key Findings

• More Debt in 2023. 56% of people say they have more credit card debt than they did 12 months ago.
• Worries Over Cost of Debt. 66% of Americans are worried about the cost of their credit card debt increasing due to interest rate hikes by the Federal Reserve.
• Long Road to Repayment. 57% of people with credit card debt say it will take them more than a year to pay it off (a 21% increase from 2022).
• Bad Spending Habits. More than a quarter of Americans admit they’d go into credit card debt for frivolous spending.
• Personal Finances Managed Better Than Government. 85% of Americans say their personal finances are managed better than the federal government.
• Debt Stress. 45% of people say credit card debt makes them feel stressed.
• Desperate for Relief. More than 1 in 3 Americans with credit card debt say they would do anything to be debt-free.
• Looking for Lower Rates. 83% of Americans say they will try to lower the interest rate on their credit card debt in 2023.

For the full results, visit WalletHub’s Credit Card Debt Survey.

Fed Rate Hike Survey Key Findings

• Tired of Rate Hikes. Nearly 3 in 4 Americans are fed up with hearing about the Fed.
• Feeling the Pain Already. 8 in 10 people say their wallets have been affected by the Fed increasing interest rates this year.
• Excellently Prepared. 3.5X more people with excellent credit are financially prepared for a recession than people with subprime credit.
• Recession ‘Round the Corner. 73% of Americans think a recession is inevitable.
• Not Ready for a Recession. Compared to January, 20% more Americans are not financially prepared for a recession.
• Fed Confusion. More than 1 in 3 people do not understand why the Fed raises interest rates.
• Jobs at Risk. 1 in 4 people say their job is at risk if the Fed continues to raise interest rates.

For the full results, visit WalletHub’s Fed Rate Hike Survey.

Q&A with WalletHub
 
What do the latest credit card debt statistics tell us about the health of U.S. consumers? 

“The latest credit card debt statistics tell us that U.S. consumers are on a dangerous trajectory. We racked up a record $180.3 billion in credit card debt during 2022, so it’s no surprise that 56% of people say they have more credit card debt than they did 12 months ago, according to a new WalletHub survey, and 57% of people with credit card debt say it will take more than a year to pay off,” said Jill Gonzalez, WalletHub analyst. “It’s not just financial health we have to worry about. WalletHub’s survey found that 45% of people say credit card debt makes them feel stressed, and more than 1 in 3 Americans with credit card debt say they would do anything to be debt-free. Let’s hope that includes buckling down and paying off debt this year.”
 
What do credit card debt statistics reveal about people’s perception of the government?
 
“Roughly 85% of Americans say their personal finances are managed better than the federal government, according to a new WalletHub survey, which is really saying something considering that U.S. consumers have a dangerous amount of debt and more than a quarter of Americans admit they’d go into credit card debt for frivolous spending,” said Jill Gonzalez, WalletHub analyst. “Needless to say, the government isn’t the best role model.”

How will credit card debt levels look by the end of 2023?  

“U.S. consumers added a record $180.3 billion in credit card debt during 2022, including a whopping $85.8 billion during the last three months of the year, which is now the record for a single quarter,” said Jill Gonzalez, WalletHub analyst. “Unfortunately, we expect similar results in 2023.”
 
Are people worried about interest rate hikes affecting their credit card debt?
 
“According to a new WalletHub survey, 66% of Americans are worried about the cost of their credit card debt increasing due to interest rate hikes by the Federal Reserve,” said Jill Gonzalez, WalletHub analyst. “People are really starting to see the cost of their debt increase after recent rate hikes, and they now know better than ever that additional rate increases will hurt their bottom line.”
 
Are people worried about a recession? 

“Most people seem resigned to the inevitability of a recession, but that hasn’t prompted much urgent preparation. Roughly 73% of people think a recession is inevitable, according to a new WalletHub survey, but the number of Americans who say they’re financially prepared for a recession has gone down by 20% since January,” said Jill Gonzalez, WalletHub analyst. “Those most at risk appear the least prepared. WalletHub’s survey found that 3.5X more people with excellent credit are financially prepared for a recession than people with subprime credit.”
 
How do people feel about Fed rate hikes? 

“Nearly 3 in 4 Americans are fed up with hearing about the Fed, according to a new WalletHub survey, and it’s understandable why they would feel that way. Eight in 10 people say their wallets have already been affected by the Fed raising rates this year, and 1 in 4 people say their job is at risk if the Fed continues to raise rates,” said Jill Gonzalez, WalletHub analyst. “Seeing rates steadily tick higher without knowing when it will stop is not good for the psyche of consumers, especially when more than 1 in 3 people don’t even understand why the Fed raises rates in the first place.”

What are investors’ expectations for interest rate hikes in 2023?

“Markets suggest that the Fed will raise its target rate by at least 100 basis points from March through the end of the year, with the bulk of the increase coming by the summer,” said Jill Gonzalez, WalletHub analyst. “The potential for end-of-year decreases in the Fed rate has dwindled over the past few months.”