Credit card balances spike to $841 billion after stimulus checks helped reduce debt

Many Americans were able to improve their financial standing because of the H1N1 epidemic.

The personal savings rate has not been seen since World War II as a result of the government's economicStimulus checks and fewer opportunities for spending.

Consumers paid off a record $83 billion in credit card debt, but the recent spike in prices for gas, groceries and housing is causing most of them to lean on their credit cards again.

Revolving credit, which includes credit card balances, jumped 20% in April from the previous month to an all-time high of $1.103 trillion, according to the Federal Reserve.

According to a report from the Federal Reserve Bank of New York, credit card balances are up year over year and are expected to keep rising.

The rise in credit card borrowing, together with auto loans, student debt and mortgages, has now propelled total household debt to a record.

According to Ted Rossman, a senior industry analyst at CreditCards.com, it took just 11 months for revolving debt to bottom out and then 15 months from there to return to a new high.

It took a long time after the financial crisis to peak. The curve has definitely been a V-shaped one.

He said it wasn't all bad news. Some of this is positive for the economy.

Credit cards are an expensive way to borrow money.

Some medical debt will disappear from credit reports.

Carrying a balance will become more expensive as the Federal Reserve raises interest rates to tame inflation.

Credit card rates follow the prime rate as the federal funds rate increases. Within a billing cycle, cardholders see the impact.

An all-time record may be set by the end of the year, according to Rossman.

The record was set in April of this year.

If the credit card's interest rate goes up by two percentage points, it will cost you $832 over the lifetime of the loan, assuming you make minimum payments on an average $5,525 balance.

It would take a long time to pay off.

The cumulative effect of paying a large rate over a long period of time is the biggest problem.

If you have a high-interest credit card, he advised you to consolidate it with a lower interest home equity loan or personal loan or use an interest-free balance transfer credit card.

You can also subscribe to CNBC on the internet.