Credit Card Balances See Biggest Jump in 20 Years Amid Surging Inflation

August 3, 2022

With prices climbing at the fastest pace in more than 40 years, more Americans are amassing debt to keep up with the cost of living. 

The total amount of household debt topped $16 trillion for the first time ever during the second quarter, according to data from the New York Federal Reserve. The majority of the increase was driven by an increase in mortgage borrowing, but in a potentially worrying sign for the economy, credit card balances are rapidly growing.

Credit card balances surged in the second quarter, jumping by $46 billion in just the three-month period between April and June. Over the last 12 months, credit card debt in the country grew by $100 billion, or 13%, the biggest annual increase in more than 20 years.

The New York Fed says that increases in the cost of living are at least partially responsible for America’s credit binge. “The impacts of inflation are apparent in high volumes of borrowing,” NY Fed researchers noted.

It is not just that Americans are growing their existing balances, as Americans opened 233 million new credit card accounts last quarter. That is the most since 2008, when the economy was in the midst of a financial crisis.

For the most part, Americans have been able to continue paying on time, a reflection of the very strong job market. The NY Fed said the share of current debt transitioning into delinquency remains “historically very low,” though it did note a modest increase, particularly among subprime and lower-income borrowers.

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