HILLSBOROUGH COUNTY, Fla. — A Federal Reserve report shows credit card debt reached a record high in the U.S.
That report shows credit card debt rose nearly 5% in the third quarter of 2023 to reach a high of $1.08 trillion.
“I think why we're starting to see record debt levels, especially record debt in credit cards, is really because we're coming out of the pandemic years," Michael Snipes, an associate professor at the University of South Florida, said.
That $1.08 trillion is pandemic-related debt. As people were uncertain about jobs, income, and the future of the economy, many racked up credit card charges to help them stay afloat.
“Maybe not necessarily having enough income and having to supplement that with the short-term borrowing that credit cards represent,” Snipes said.
Although it may feel like the pandemic is in the past, industries are still recovering. We spoke to a local credit counselor from Money Management International, who said they have seen a 45% increase in the number of people reaching out to them for debt help in the last year.
“Here in Florida, the biggest impact has been the increase of rent, the increase of housing costs, this has cost individuals to compensate with credit card debt,” Tomas Vargas with Money Management International said.
Vargas said those high housing prices are unique to Florida, especially the Tampa Bay area. As for how those national numbers are impacting Florida's economy, Vargas explained the Sunshine State relies heavily on money made from tourists. As more people work to pay off credit card debt, fewer people will vacation and spend money in Florida.
“Anytime you have these huge debts and the money that you're kind of pouring into this sinkhole, that’s taking away consumption and spending from other parts of the economy,” Snipes said.
He said he expects that number to continue to climb and the U.S. to reach another record high because of Christmas spending.
“As debt goes up and up and up, is this going to imply a wave of bankruptcy? Is this going to imply a drop in consumer spending in the coming months? It’s really hard to predict exactly where this is going to go,” Snipes said.
He explained if you're dealing with credit card debt, the best thing to do right now is make a plan. Don't get comfortable with just making the minimum payment.
Vargas said, “If you're just making the minimum payment, you're making very little headway on those debts.”
Debt can feel scary, but there is help available. Both people we spoke to say the best thing to do is make a plan with a professional.
There are some free resources to help below:
