The consistent raises in its key interest rates from the Federal Reserve may not be having much of an effect on how people are spending their money.
According to a report from the Associated Press, credit card debt is “already at a record high, and more people are carrying debt month to month.”
While the Fed’s interest rate increases are meant to fight inflation, they’ve also led to people paying higher annual percentage rates on their credit card debt. The Fed announced Wednesday that it would increase rates by another quarter-point.
According to the AP, 46% of people are carrying debt from month to month, up from 39% a year ago, according to Bankrate.com, an online financial information site.According to Bankrate, the average credit card interest rate is up to 20.4%, the highest since their tracking began in the mid-1980s.
A new poll by The Associated Press-NORC Center for Public Affairs Research finds 35% of U.S. adults report that their household debt is higher than it was a year ago. Just 17% say it has decreased. Roughly 4 in 10 adults in households making under $100,000 a year say their debt is up, compared with about a quarter in households making more than that, according to the AP.
Data also shows more people are now falling behind on payments.
“The more than half who pay in full each month are clearly doing a lot better than the almost half who don’t,” Bankrate analyst Greg McBride told the AP. “Those who tend to carry balances tend to be younger people, people making lower incomes, and those with lower credit scores. Another factor contributing to rising debt is inflation, which means the cost of day-to-day living is outpacing paychecks.”