Credit Card Debt Jumps Above $1 Trillion for First Time Ever
August 8, 2023
American households’ budgets have been stretched by inflation and more are turning to credit cards to make ends meet, bringing the nation’s collective credit card balance above $1 trillion, according to the New York Federal Reserve.
Total credit card debt jumped by $45 billion in the months between April and June, an increase of more than 4%. That brought the total amount owed to $1.03 trillion, the highest level in Fed data dating back to 2003. The jump in credit card debt was the primary driver of total household debt, which climbed by roughly $16 billion during the quarter, bringing the total to $17.06 trillion.
Fed researchers attributed the rise in credit card balances to inflationary pressures and higher levels of consumption.
It is not just that people are using their credit cards more, but they are also having trouble keeping up with payments. The Fed’s measure of credit card debt 30 or more days late climbed to 7.2% in the second quarter, up from 6.5% in Q1 and the highest rate since the first quarter of 2012.
Researchers from the New York Fed said in a blog post about the data that “there is little evidence of widespread financial distress for consumers.” However, they noted that this may not last and that the resumption of student loan payments in the fall “will be a huge test for many cardholders.”