As interest rates reach historic new highs, more and more Americans are going into greater credit-card debt. A series of surveys have revealed the increasingly troubling situation.

One poll, from finance website GOBankingRates shows that 14 million Americans owe more than $10,000 in credit card debt. Another, from personal finance company Nerdwallet, found that the average U.S. household carries $7,486 in credit-card debt, which is a 29% increase from the previous year. Finally, a new survey from consumer finance company Bankrate shows that 46 percent of card holders carry credit-card balances from month to month, which is up from 39 percent the previous year.

According to the Federal Reserve, credit-card interest hit 20% as of late 2022, which is the highest level in the almost 30 years of tracking. Americans are therefore accruing greater balances at a time when it is increasingly difficult to pay them down.

Indeed, according to LendingTree, the nation's collective credit-card balance totals $925 billion, a figure just below 2019's historic record of $927 billion.

While a large credit-card balance has long been associated with frivolous spending, recent figures suggest that the rise in credit-card debt has much more to do with covering basic living costs than it does impulse buying. According to an analysis by NerdWallet, over the past three years consumer costs have risen by 16% while the median income has only grown by 7%.

Indeed, in a December 2022 survey by the U.S. News & World Report asking consumers the key reason why they had accrued credit-card debt, the most frequent answer was 'increased costs coupled with insufficient income.' Only one-tenth of those surveyed cited frivolous purchasing as the reason for their debt. Many of the respondents instead cited circumstances like job loss, sudden medical emergencies, and auto repair as the reason that they were in debt.

There are two types of credit-card customers in the US. The larger group is one that pays off its card balance every month (named 'deadbeats' by card companies because they don't earn a great deal of money for them). The smaller group, but one that is growing in size, is those that carry credit-card debt from month to month.

The U.S. News survey reports that 15% of those surveyed carry credit-credit balances of $10,000 or more. And, as the Hill reports, 'A five-figure credit balance can cripple a household budget.'

According to Nerdwallet, a household with the average credit-card debt of $7,486, at the average interest rate of 20.4%, would need to spend $695 in order to retire the debt within a year. If the family paid $200 per month, it would take 5 years for the debit to be retired. This is assuming both a constant interest rate and that the family never used the card again.

Both credit-card rates and interest rates are rising. In 2022, the Federal Reserve raised interest rates by more than 4%. This hike in rates meant that mortgage rates were pushed to around 7%, the highest level in over a decade.

And credit card rates are far higher than mortgage rates. At the end of 2022, the average credit card rate topped 20%, up from around 13-14% in 2016.

Because of high interest rates, credit-card lenders are increasingly marketing their cards on the prospect of 'rewards' rather than interest rates. These 'rewards' tend to come in the form of credit toward airplane travel or 'points' to be redeemed for certain goods and services.

It is a tactic that works. In a recent survey by Bankrate, only 10% of cardholders cited competitive interest rate as the best feature of their card, while 36% said the best feature was the rewards.

However, as interest rates are reaching new highs, those rewards may not be worth it. As The Hill reports, 'credit-card rewards can deliver meaningful benefits to the cardholder who makes a lot of charges and pays the balance off every month. Fail to retire the debt, however, and the game quickly turns against the player'.