Member-only story
Credit Card Companies Next To Default?
Rising interest rates and dropping payments could create more financial chaos
According to the New York Federal Reserve, household debt has risen to almost $17 trillion. Meanwhile, consumers are keeping ever-larger credit card balances. Many have reached their credit limit and find their cards have been locked. Many can no longer afford to pay even the minimum payments on their credit card bills.
However, just because they stop using their cards and stop paying their bills does not mean those debts go away. The interest on these debts will continue to pile up, and will get worse as interest rates continue to rise.
This could lead to defaults among credit card issuers.
That could be just one part of the financial avalanche the U.S. economy could be facing unless inflation slows down and the economy improves.
While consumers are able to carry a large credit card balance when inflation and interest rates are low and the economy is growing, with changing circumstances this is often no longer the case.
Unless their income increases, many families will have to change their spending and borrowing patterns to adjust to the new reality. However, already there are 20 million households that are behind on their…
