NORFOLK, Va. - A new report from the Federal Reserve Bank of New York shows Americans are carrying a record $986 billion in credit card debt, up 17 percent from last year.
“What has happened is we have continued to spend the money as if we have the money, in other words, we have not changed our habits,” said Vinod Agarwal, an economics professor at Old Dominion University.
Agarwal is referencing stimulus checks from the pandemic. He said people were used to the influx of funds and began to spend beyond what is realistic.
He said the Federal Reserve has also begun to increase short-term interest rates so that in turn has caused interest rates on credit cards to go up.
He told News 3 the average interest rate on a credit card is a staggering 21-24%, and most people don't pay their bill in full every month, digging a hole that's hard to get out of.
“Moral of the story is very simple, you spend money within your means, don’t think of credit card as a free loan because it is not free”
Agarwal said the best advice is to only spend what you have, and don't let your balance sneak by to the next month.
