Thekabarnews.com—New figures show that credit card delinquencies in the U.S. are at multi-year highs. Soaring inflation and high borrowing costs add to the financial pain for American households.

However, the increasing burden of consumer debt is affecting low-income families. It also affects middle- and upper-income professionals. They are struggling to cope with rising living expenses and historically high interest rates.

Consider, for instance, Catherine Clarke, operations director of a busy New England hospital. She is 42 years of age. Clarke was earning around US$194,000 a year and was drowning in a growing mountain of credit card debt.

Reports say she gradually racked up US$15,000 on a Chase Sapphire credit card. She could pay the minimum US$572 a month. However, she would have difficulty making any real progress with that kind of interest rate of 26 per cent.

Clarke said the combined effect of inflation and higher borrowing costs had been adding to the debt over time.

Apparently she had cut down on her social life and curbed her frivolous spending. She even looked into getting a second job at a local gym to help with her costs.

Clarke’s story is typical of a wider trend across the United States.

The data from the Federal Reserve Bank of New York showed that the share of credit card balances that were at least 90 days overdue stood at 13.12% in the first quarter of the year.

That’s the highest level of delinquency in 15 years. It is also the worst since the aftermath of the global financial crisis in 2008.

The increase reflects mounting pressure on household budgets as consumers grapple with stubborn inflation and high housing prices. Additionally, borrowing costs remain near multi-decade highs.

Inflation has cooled from its peak. However, the cost of housing, food, transportation, health care, and other essentials is still too high for many families.

And the Federal Reserve has kept credit-card interest rates high as it pursued tight monetary policy to fight inflation.

That means consumers with revolving balances will pay much more in interest, making it harder to pay down their debt.

If the interest rate is higher than 20 percent and you are only making the minimum payment each month, you are typically only paying off a small part of the principal.

This can lock borrowers into long repayment cycles and add to the overall financial burden.

With credit card delinquencies climbing higher, policymakers, financial institutions and economists are taking note. They are watching consumer spending cautiously and very closely, a critical barometer of economic health.

Consumer spending is a big part of the U.S. economy. Therefore, an extended period of household financial stress could be a concern for future economic growth.

The labor market still holds up fairly well. Nevertheless, ongoing strain from higher borrowing costs could weigh on household balance sheets and consumer confidence.

For many Americans, the debt problem is more than a numbers problem. Money problems can have long-lasting negative effects on mental health, relationships and overall well-being.

The latest delinquency figures underscore how the effects of inflation and high interest rates are still rippling through the American economy. Even for those with relatively high incomes, households navigate a tough economic landscape.

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