Americans are dragging more credit card debt, with minimum payments at record levels

A concerning trend is forming in the US: consumers are dragging heftier credit card balances and making minimum payments more often.

A report from the Federal Reserve Bank of Philadelphia, collected by the Wall Street Journal, concluded that credit card balances dragged through months are at their highest since 2012.

The document echoed the results of the quarterly reports of the largest banks in the country. JPMorgan Chase and Capital One said people carry more debt and pay less.

According to CNBC, experts place the rate of consumers making only minimum monthly payments between 10% and 20%, and those who stopped paying at around 3%.

During an earnings call collected by the WSJ, Richard Fairbank, CEO of Capital One, said most consumers are in good shape, but some are feeling the hit of higher costs.

The trend is partly related to credit card companies loosening their standards during the pandemic, as stimulus checks arrived, and issuing cards to riskier consumers.

According to data from Investopedia cited by CNBC, the number of low-cost credit cards issued for borrowers with poor or no credit scores topped 30%.

Additionally, the Federal Reserve said credit card interest rates are at a record high of over 21%. They have persisted at those numbers despite the Fed cutting benchmark rates by one point last year.

The cost of living has also contributed to higher debt numbers. According to CNBC and the WSJ experts, more consumers are using credit cards for basic needs.

An expert told the WSJ that people increasingly use debt for rent, groceries, gas, child care, and insurance. Higher rates and costs can be a deadly combination for those struggling.

“If they’re only making the minimum payment, you can go very quickly from getting by to drowning,” Elizabeth Renter, senior economist at personal finance company NerdWallet, told CNBC.

According to the outlet, it would take 22 years and cost $18,000 in interest for someone with the average credit card balance (around 10,000) to pay exclusively the minimum each month.

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