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Americans are swamped in $1 trillion of credit card debt

NYPost  |  Catherine Curan

Rising credit card interest rates are pushing Americans deeper into a long-term debt trap.

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Americans now owe $1 trillion in credit card debt, with an average monthly balance of about $9,600 for borrowers who don’t pay their cards in full each month.

A year ago, a credit card holder making only minimum payments shelled out about $1,185 in annual interest, on average, said Ben Woolsey of CreditCards.com.

After three quarter-point hikes by the Federal Reserve — a cost that banks pass on almost immediately to card holders — credit card borrowers are now forking over $1,254, or $69 more a year, in interest, on average.

Two more rate hikes are on the table for 2017, which would bring the total to $1,301, or $116 a year in interest.

One hundred and sixteen dollars — the cost of a dozen roses on Valentine’s Day, or about 20 Cronuts — may not sound like much. But when consumers only make minimum payments, credit card balances balloon. And recent interest rate hikes come as ordinary Americans are already struggling with surging prices for essentials.

Income gains aren’t large enough to keep pace. Wages for an ordinary working person — for example, a nurse — have risen 21 percent in the past decade to about $2,412 a month, according to Bureau of Labor Statistics data.

By contrast, medical costs rose 57 percent, food prices spiked 36 percent and housing costs jumped 32 percent since 2003, according to online personal finance Web site NerdWallet.

“It’s not surprising that debt continues to increase when it’s becoming harder to make ends meet,” noted NerdWallet’s 2106 Annual Household Debt Survey.

Americans have been eking out their monthly minimum credit card payments from deep inside the 21st century debt trap. Defaults remain well below the 6.8 percent high reached during the Great Recession, but have edged up recently to 2.3 percent.

Personal finance experts recommend borrowers with a hefty balance shop around for zero-percent-interest balance transfer offers. Look for fees of 3 percent or less, and terms of 18 months or more.

Check out credit unions as well as banks, which often require higher credit scores.

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