In a report this week, economists with the New York Federal Reserve bank said that over the July-September period this year, US credit card debt continued to surge, marking the eighth quarter in a row of year-on-year increases.
In the biggest increase since records began being kept in 1999, the regulator’s economists said that by their calculations, the balances on American’s credit cards increased by $48 billion, for a 4.7% increase over the previous quarter, and by $154 billion from the same period one year prior. Overall, the sum of all credit card debts came to a new record high of $1.08 trillion.
At the same time, mortgage balances also surged, reaching $12.14 trillion, as both student loan balances and auto loans each rose $1.6 trillion.
During the reporting period, total household debt increased by $228 billion, mostly due to student loans and credit cards, which brought the total up to $17.29 trillion.
The report noted that as inflation remained elevated, and interest rates remained elevated as well, more households were experiencing problems managing their debt. As an example, the report noted that for the duration of the reporting period, almost 9.5% of credit card balances were over 90 days delinquent, which was an increase over the 8% which were delinquent during the second quarter.
In a statement which accompanied the report, the bank’s researchers said that, “The increase in balances is consistent with strong nominal spending and real GDP growth over the same time frame. But credit card delinquencies continue to rise from their historical lows seen during the pandemic.”
They added, “The transition rate into delinquency remains below the pre-pandemic level for mortgages, which comprise the largest share of household debt, but auto loan and credit card delinquencies have surpassed pre-pandemic levels and continue to rise.”
The report went on to note that give the relative stability of both the US economy and the labor market, the increase in households which were becoming delinquent was “surprising.”
They concluded that although changes in borrowing standards could underlie the trend, it might also be a signal that “real financial stress” could be beginning to emerge.
