FACTS: Americans Still Being Crushed by Bidenomics

Joe Biden in suit walking.

(TheRedAlertNews.com) – In overwhelming evidence that the nation is still bearing the brunt of Bidenomics, America faces a financial crossroad as credit card debt climbs to $645 billion, representing 71% of all card balances.

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Fed by escalating interest rates, 10.75% of cardholders are merely making minimum payments, signaling distress the likes of which we haven’t seen in over 10 years.

The Philadelphia Federal Reserve Bank’s recent findings highlight the unsettling rise in revolving credit card debt.

A staggering 10.75% of consumers paid only the minimum amount due, a figure that reflects mounting financial distress.

This practice often traps individuals in a cycle of debt with accumulating interest, a concern that demands the attention of policymakers and financial advisors.

Revolving credit card balances have seen a 52.5% rise since 2021, now totaling $645 billion. This increase indicates not just higher spending, but potential long-term financial hardships.

The 3.52% delinquency rate for credit card balances 30+ days past due reinforces these warnings, though still lower than the 6.8% peak during the 2008-09 financial crisis.

Tighter lending standards from banks add another layer, decreasing new credit card originations and emphasizing higher origination credit quality.

First-line mortgage origination activity remains notably low due to high interest rates, which reached $63 billion in Q3 2024, a stark decline from $219 billion in 2021.

These consistently elevated rates discourage refinancing and weaken new mortgage demand, highlighting a significant pressure point in the housing market.

Despite this, existing mortgages show resilience with low delinquency rates, offering a silver lining amidst the economic turmoil.

“With higher prices, people are going to turn to credit cards more to use for necessities. You tack on higher interest rates and then you have more difficulty getting by. If they’re only making the minimum payment, you can go very quickly from getting by to drowning,” stated Elizabeth Renter, senior economist at personal finance company NerdWallet, as quoted by CNBC.

The consumer landscape reveals that average credit card rates have surged to 21.5%, a dramatic 50% increase from just three years ago.

This leaves many households struggling to keep up, impacting consumer spending. Recent adjustments for inflation showed an increase in November but projections warn of potential deceleration in 2025.

Notably, a NerdWallet survey reveals that 48% of respondents are using credit cards for essentials, with 22% making only minimum payments.

The Federal Reserve’s overnight lending rate currently ranges between 4.25% and 4.50%.

Designed to stabilize inflation, these rates have inadvertently tightened credit access, pushing banks to enforce stricter lending standards.

Consequently, credit card defaults have reached their highest levels since 2010, fueled in part by December’s holiday spending spree, where 1 in 3 Americans incurred holiday debt.

The culminating effect of rising balances and record-level minimum payments highlights an urgent need for educated financial planning.

As interest rates climb, it becomes increasingly vital for consumers to manage their finances prudently.

The risks of unchecked credit card debt are monumental, and thus, deserve swift action from both consumers and financial institutions to mitigate the looming challenges ahead.

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