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Credit card applications soared this year as Americans faced higher everyday expenses for necessities such as food, gasoline and rent, according to a New York Federal Reserve Bank survey published Monday.

application rate for Credit Card hit 27.1% in October, well above last year’s level of 26.5% and the pre-pandemic reading of 26.3%. In 2022, the typical application rate for credit cards is 26.7%, up about 3.6 percentage points from the previous year.


Application rates rose for Americans with credit scores over 760 and fell for those with scores under 680.

Although fewer Americans are estimated to need to find the $2,000 for a unforeseen expenses The following month (32% versus 33.1% in 2021), more respondents said they would struggle to come up with extra cash.

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“Looking ahead to the next 12 months, households anticipate they will be less likely to apply for an auto loan, mortgage, or mortgage-refinance loan, but a higher average to apply for a credit card or credit-card limit increase.” report the possibility New York Fed said in a statement. “Consumers expect some easing of credit standards, with a slightly lower average predicted likelihood of a future credit application being rejected, conditional on applying in the next 12 months.”

The rise in credit card applications is a matter of some concern, as interest rates are astronomically high right now. According to the Bankrate.com database, the average credit card APR, or annual percentage rate, set a new record high of 19.14% last week. The previous record was 19% in July 1991.

If people are taking out loans to compensate for higher prices, they may end up paying more for goods in the long run. For example, if you owe a $5,000 loan – which the average American does – current APR levels would mean it would take about 191 months and $6,546 in interest to pay off the loan with the minimum payment.

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By comparison, an average rate of 16.3% at the beginning of the year would mean paying $5,517 in interest and getting out of debt after 185 months.

american grocery store

“Credit card rates are very high compared to other forms of debt,” said Bankrate.com analyst Ted Rossman. “We’re talking three, four or five times more than most people are paying for mortgages, car loans and student loans. Paying off your credit card debt should be a top priority, especially with record high interest rates.” with.”

The survey comes a week after the New York Fed reported that credit card balances climbed more than 15% from a year earlier, the biggest annual jump in more than 20 years.

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“With prices up more than 8% from a year ago, it is perhaps not surprising that balances are rising,” Fed researchers said. wrote in a blog post, “The real test, of course, will follow whether these borrowers will be able to continue making payments on their credit cards.”

Fox Business’ Edward Lawrence contributed to this report.