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Life and Debt: Why credit card debt is at a historic high

Yera Dominguez receives a credit card from a customer for payment at Lorenzo's Italian Market in Miami, Florida.
Yera Dominguez receives a credit card from a customer for payment at Lorenzo's Italian Market in Miami, Florida.

They’re plastic and shiny. They fit perfectly into your wallet. You can spend hundreds or thousands of dollars on them up front that can be paid back over time. 

From that angle, credit cards look like a great deal. But interest rates, late fees, and the cycle of debt can come back to bite cardholders. 

Nearly half of U.S. credit card owners had an average of more than $5,200 in outstanding debt in 2022. 

Credit card debt overall is at a historic high.In the last three months of 2022, credit card balances in the U.S. rose from $61 billion to nearly $990 billion according to the Federal Reserve Bank in New York. It’s likely to surpass $1 trillion this year.

Why is credit card debt so high right now? How sustainable is this for the economy? And what can cardholders do to break this cycle of debt?

We continue our weeklong seriesin partnership with Bloomberg News,Life and Debt.Yesterday we talked about the federal debt limit. And we’ll get into student loans and medical debt later this week. But today we focus on credit card debt.

Copyright 2023 WAMU 88.5

Haili Blassingame