Americans’ debt continues to reach unprecedented levels, with credit card balances setting a new record at the end of September, according to the latest report from the New York Federal Reserve.
Total credit card debt soared to $1.17 trillion during the third quarter, up $24 billion from the previous quarter, underscoring the ongoing financial strain on US households.
This new peak marks the highest recorded credit card debt since the Fed began tracking this data in 2003. The report revealed that overall household debt also climbed to a record $17.94 trillion, with increases across mortgages, auto loans, and student loans. Mortgage balances rose to $12.59 trillion, while auto and student loan balances reached $1.64 trillion and $1.61 trillion, respectively.
Although household incomes have outpaced debt growth, delinquency rates for credit cards and auto loans remain a pressing concern. Credit card delinquencies, while slightly lower than last quarter, still stood at 8.8%, reflecting a persistently high level. Delinquency rates for auto loans and mortgages also increased, by 0.2 and 0.3 percentage points, respectively.
“While income growth is helping to moderate some of the strain, the high delinquency rates are revealing financial stress among many households,” noted Donghoon Lee, Economic Research Advisor at the New York Fed.
Fed researchers noted that these delinquencies are increasingly concentrated among younger borrowers, who face rising monthly payments as a result of inflation and elevated interest rates. In a press call, Fed officials highlighted that inflation-driven cost increases, alongside interest rate hikes, are intensifying financial burdens, especially for younger consumers.
“Elevated flows into delinquency, particularly for credit cards and auto loans, continue to be a source of concern,” a New York Fed researcher commented.
The dual effect of inflation and high interest rates is pressuring consumers who are now allocating larger portions of their income toward servicing debt.
Despite these challenges, a degree of moderation was seen as credit card delinquency rates fell slightly from last quarter’s 9.1%. Nevertheless, Fed officials are closely monitoring the credit landscape, emphasizing the importance of consumer resilience amid a tightening financial environment.
FOX Business contributed to this report.
