Credit card debt hits new record, New York Fed data shows

Credit card debt hits record levels ahead of the holidays

Ted Rossman, senior industry analyst at Bankrate, joins LiveNOW’s Carel Lajara to discuss how consumers can manage their credit card debt ahead of the holiday season.

Americans’ credit card debt continues to climb, hitting a new record high in late September, according to a new report from The New York Times. Federal Reserve.

Total credit card debt reached $1.17 trillion in the third quarter, an increase of $24 billion from the previous quarter, according to the report. This is the highest level ever recorded in Fed data dating back to 2003.

U.S. consumer credit card debt is rising by billions of dollars amid rising inflation and interest rates, hitting a new record last quarter. (Frédéric J. Brown/AFP via Getty Images)

The report shows that total household debt also hit a new high of $17.94 trillion, as did balances on mortgages ($12.59 trillion), auto loans ($1.64 trillion) and loans students ($1.61 trillion).

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“Even as household balances continue to rise in nominal terms, income growth has outpaced debt growth,” said Donghoon Lee, an economic research adviser at the New York Fed. “Nevertheless, high delinquency rates reveal stress for many households, even amid moderating delinquency trends this quarter.”

Americans’ credit card debt hit a new record of $1.17 trillion last quarter. (Justin Sullivan/Getty Images)

Although still above pre-pandemic highs, credit card delinquencies declined somewhat last quarter to 8.8%, down from 9.1% from the previous quarter. Delinquencies on auto loans and mortgages worsened slightly, increasing by 0.2 and 0.3 percentage points, respectively.

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In a call to discuss the report after its release, New York Fed researchers discussed the growth in debt balances across the board, the persistent and “concerning” growth of car loan and credit card defaults, and how stress and high default rates are concentrated among younger borrowers.

Auto loan delinquencies increased slightly in the third quarter. (David Paul Morris/Bloomberg via Getty Images)

“We have seen particularly high delinquency flows in recent years, particularly for credit cards as well as car loans,” said one researcher. “It’s something we’ve flagged as a cause for concern – something to watch out for.”

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They pointed to the increase in payments made by consumers on credit cards and auto loans, attributed in part to inflation and also because of higher interest rates.

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