US credit card debt is set to exceed $1trn. The rising pile of debt highlights the need for cardholders to understand how credit card usage impacts their credit score. And to understand the consequences of missed payments.
With rising inflation and further potential rate rises, the position is likely to get worse during 2023. Average US credit card interest rates are currently around 20%. According to Bankrate, this represents a four-percentage point rise in the past 12 months.
Go deeper with GlobalData
TransUnion reports that the average US credit cardholder carries around $5,733 of credit card debt. Cardholders aged 18-29 hold credit card debt of under $3,000 on average. Cardholders in their forties owe around $7,600 in credit card debt.
US fintech Credello is trying to educate US consumers to re-evaluate their financial behaviour. Credello calls the rise in credit card debt a wake-up call and calls on Americans to ‘take the necessary steps to regain control’.
In particular, it highlights the potential repercussions on consumers’ credit score as a result of one missed card payment. Late payments result in late fees and penalty interest rates. They are also reported to credit bureaus, impacting users’ credit history.
Additionally, late payments can stay on consumers’ credit report for up to seven years, making it harder to obtain credit in the future.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataLenders perceive individuals with a history of missed payments as higher risk borrowers. This may of course result in loan denials or higher interest rates.
