Inflation may be cooling, but when it comes to credit card debt more than a third of cardholders are finding themselves in hot water.

Roughly 2 in 5 credit cardholders, or 37%, have either maxed out a credit card or come close to doing so since the Federal Reserve began hiking interest rates in March 2022, according to a new online survey of 3,576 U.S. adults by personal finance firm Bankrate.

Lower-income earners, older people and families those with children under the age of 18 are more likely to say they’ve reached their credit spending limit since the central bank started raising its benchmark rate, the survey found. Of those respondents, 54% point to inflation as the main reason why they’ve tapped out a card, while 38% cite emergency expenses, 25% cite job or income loss, and 22% point to medical costs. 

Credit card debt has risen to alarming heights since 2022, as soaring costs in food, housing and auto rates have resulted in many Americans becoming more reliant on plastic simply to make ends meet. Nationwide, consumers collectively owed $1.1 trillion in credit card debt as of the second quarter of 2024, up $27 billion from the previous quarter. 

“Inflation does not care if you are rich or poor. Everyone can feel its wrath,” Bankrate analyst Sarah Foster said in the report, published Thursday. “With limited options to absorb those higher costs, many low-income Americans have had no choice but to take on debt to afford costlier essentials — at a time when credit card rates are near record highs,” 

Exorbitant APRs

Credit card annual percentage rates surged as the Fed jacked up interest rates in order to quash inflation, making delinquency extremely costly for cardholders. The average APR is now a whopping 24.72%, according to Lending Tree. 

And though the Fed recently lowered its benchmark rate by 0.50 percentage points, the impact of the cut on APRs “will probably only save the average credit card debtor a couple of dollars per month off their bill,” LendingTree credit analyst Matt Schulz told CBS MoneyWatch in September.

Consumers who have topped out their credit cards over the last two years are more likely to fall into delinquency, Bankrate found. More than half of such cardholders, or 59%, said they have missed at least one monthly payment on a bill since the beginning of 2024. Credit cards were the most common monthly expense that went unpaid, at 35%, according to the survey.

Credit card delinquencies have soared more than 50% in the past year, according to an August report from the Federal Reserve Bank of New York. About 6.4% of all accounts are now 90 days past due, up from 4% at the end of 2022.

“Being maxed out doesn’t just have ramifications for someone’s personal finances, but it can be a headwind for the economy, too,” said Foster, adding that Americans could find themselves tapped out of credit ahead of the holiday shopping season. “If Americans have already been struggling to keep up with their bills, rising unemployment and weaker job growth could make that picture even worse.”