The United States has over US$1 TRILLION in credit card debt!  Should you be worried?

The United States is grappling with record-high credit card debt. In the last three months of 2023, credit card balances surged by US$50 billion. In just THREE months!

But what’s causing this?

Well, one striking trend is the increase in non-payments, particularly among borrowers aged 30 to 39. As these individuals juggle high student loan debt and other financial obligations, credit card delinquencies have spiked, reaching an annualized rate of 8.5%.

The surge in credit card debt reflects both more consumer spending and higher borrowing costs.

And as delinquency rates soar, it’s clear that financial stress is on the rise, especially among younger borrowers. 

But why does this matter for Jamaica? Let’s break it down.

According to reports from the Bank of Jamaica, in December 2020, Jamaicans’ credit card debt was close to J$54 billion.  By December 2023, it had risen to nearly J$80 billion! You see the trend? 

And that’s not even counting the people who borrow from microcredit institutions, many of whom don’t even qualify for a credit card. Now I know there are varying factors at play, including the pandemic.  

Also, as the workforce grows and wages increase, more people will have the capacity to borrow and spend.

Also, in the US, they do hand out credit cards like nutten.

But against the backdrop of a volatile global economy, the surge in credit card debt raises red flags. 

And while Jamaica may not have a trillion-dollar credit card debt, the challenges faced by the working class are real. With rising cost of living, many Jamaicans may turn to credit cards to make ends meet.

As we explore the implications for Jamaica, questions arise about the long-term sustainability of relying on credit cards to bridge financial gaps. 

Is there a tipping point where convenience turns into crisis? 

Understanding the role of credit cards is an important part of responsible financial behaviour..

And that’s the bottom line.