TAMPA, Fla. (WFLA) — As a state, Florida has the third largest amount of total credit card debt in the country, and had the third largest increase in the United States during the past three months. For the second fiscal quarter of 2022, Florida’s credit debt went up a collective $4.61 billion, according to a new debt study by WalletHub.
California had the largest increase and retained the largest amount of debt in the second quarter, while Vermont had lowest debt total. Wyoming had the smallest increase in debt for the second quarter of 2022.
In the entire U.S., credit card debt increased by close to $67.1 billion, according to the WalletHub study, which the company calls an all-time record for that part of the year. Compared to credit debt changes after the Great Recession, when the economy sank from 2007 to 2009, WalletHub said the increase this past quarters was 3.5 times larger than the second quarter average.
By the end of the year, WalletHub is predicting a $110 billion overall increase in credit debt than the year before, close to an annual record.
As far as why the debt increases are higher, WalletHub puts some of the blame on interest rate hikes from the Federal Reserve. With another hike expected in September, WalletHub said people with credit card debt could have to pay an extra $5.3 billion over the coming year, in addition to $15.3 billion already added by previous rate hikes from the U.S. Central Bank.
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According to the study, the increase of credit debt in Q2 was a 50% rise over the previous second quarter in 2021. For the 2021 quarter, credit debt increased $44.9 billion, while it increased $67.1 billion in 2022, a $22.2 billion higher level.
The Federal Reserve’s efforts to decrease inflation through higher interest rates has had an impact across the market, including credit card debt, loans, and the bond market. A new inflation report is expected from the U.S. Bureau of Labor Statistics on Tuesday, which will show if any progress has been made in the past month to cut down the rate on the Consumer Price Index. The July CPI was a reported 8.5%.
While the central bank has worked on its end to adjust monetary policy for the U.S. to slow a heated economy and lower prices, U.S. Congress has also worked on finding ways to provide relief to Americans amid ongoing inflation, down in the past month but having been on a steady increase since January 2021.
Despite slowed growth across multiple industries and an overall decrease in the U.S. gross domestic product for two quarters, low unemployment numbers throughout 2022 have been a point used to avoid declaring a recession. However, the Federal Reserve said the possibility of a recession in 2023 is approaching 60%, as of their last check.