Consumer debt reaches all-time high, but inflation is hiding progress Americans are making in handling debt

Jan 2, 2024, 11:35 PM | Updated: Jan 3, 2024, 3:35 pm

SALT LAKE CITY — The news around consumer debt has been bleak – data from the Federal Reserve Bank of New York shows household debt has been going up and up since the pandemic, currently $17.29 trillion – a record.

The continual climb makes sense, after the past couple of years of higher prices on everything from gas to groceries.

“We hit a record high an absolute record high of $1.2 trillion in credit card debt,” said Christie Mathern, an editor at WalletHub. “That is a huge number.”

But there may be a silver lining, she said. In the long run, the same inflation contributing to the eye-popping record debt numbers also softens the blow.

“When you adjust for inflation to compare this number to past years, our current credit card debt total is actually 15% lower than the highest number in 2008,” Mathern said.

The year 2008 was a record debt year at the height of the Great Recession. It’s not exactly a goalpost for which economists think we should strive, but also, a little cushion to the blow that makes our debt feel like it’s out of control.

“Yeah, you have a big number here,” Mathern said. “And yes, inflation is bad. But also know the sky is not quite falling.”

The best way to get out of debt is to set a budget and stick to it – knowing it won’t happen overnight. Other ideas include considering a 0% interest credit card and trying to pay off credit cards starting with the cards that have the highest interest rates first.

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Consumer debt reaches all-time high, but inflation is hiding progress Americans are making in handling debt