Americans 'Reluctant' to Spend Big, New Fed Report Reveals — Here's What It MeansStill, the average U.S. household owes more than $17,000 in credit card debt, per NerdWallet.

Many U.S. consumers have reeled in their purchases amid highinflationandrecessionfears.

Throughout 2022,consumer debtlevels rose at record rates with people spending more freely post-pandemic peak, but as the year came to an end, the Federal Reserve hiked interest rates to curtail inflation — causing many Americans to close their wallets, per Federal Reserve data reported byCNN.

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The average U.S. household owes $17,066 in credit card debt, and the average amount of credit card interest paid by households increased when theFed raised interest rates, leaving U.S. households to pay an average of $1,380 in interest this year, assuming rates don't continue to rise, according toNerdWallet's annual study.

Now, Americans are more cautious about spending overall.

"Consumer spendingcertainly isn't falling off a cliff, but we are seeing ample evidence that Americans are becoming more reluctant to make certain purchases, especially larger expenses and acquiring physical goods," Ted Rossman, a senior industry analyst with Bankrate, told CNN. "Services spending has been more robust, perhaps still owing to pent-up demand that stacked up during the pandemic for things like traveling and dining out."

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Additionally, the Fed's report found that revolving credit balances (credit cards, for the most part), grew by 7.3% in December; that's the lowest increase month over month since the summer of 2021, per Rossman.

Growing balances in a month when spending dipped could indicate the impact of those higher interest rates, Rossman added.