Credit-card debt surpassed the $1 trillion mark during the second quarter, a milestone pointing at consumers’ continuing willingness — or need — to resort to credit cards in order to meet rising prices.
Americans’ collective credit-card bill rose to $1.03 trillion from $986 billion in the first quarter, according to the household debt report released Tuesday by the Federal Reserve Bank of New York.
Overall, Americans are taking on more debt and largely paying their bills on time, but cracks appear to be showing.
Household debt climbed to $17.06 trillion, up just 0.1% from the previous quarter. This figure counts debts including mortgages, credit-card bills, car loans and student loans. Credit-card debt increased at the sharpest rate of all debt categories, researchers noted.
Meanwhile, delinquency rates pushed higher. The share of credit-card debt that was at least 30 past due increased to 7.2%, up from 6.5% in the first quarter. That’s the highest level since the first quarter of 2012, New York Fed data shows.
For car loans, the share of auto loans past due by at least 30 days climbed to 7.2% in the second quarter from 6.8% during the prior quarter. That’s the highest since the first quarter of 2018, data shows.
“Credit-card balances saw brisk growth in the second quarter. And while delinquency rates have edged up, they appear to have normalized to pre-pandemic levels,” Joelle Scally, regional economic principal at the New York Fed’s Household and Public Policy Research Division, said in a statement.
There are signs of “some stabilization” on the amount of past-due credit-card bills, researchers said, but the numbers still indicate that consumers are getting saddled with more debt just as debt loads are expected to increase in the fall.
Starting in October, federal student-loan payments will resume. The Biden administration says it will hold off on some of the harshest consequences for non-payment through September 2024, such as putting unpaid loans in default or reporting delinquencies to credit-reporting bureaus.
Consumers paying down their federal student loans will have a combined $9 billion less to spend each month, and $100 billion less during the year, according to one estimate from Torsten Sløk, chief economist and partner at Apollo Global Management.
A day ahead of the latest numbers on household debt, a separate survey showed more people carrying a credit-card balance.
Nearly half, 47%, of surveyed card holders said they were carrying a monthly balance, according to Bankrate, a personal-finance site. That’s up from 46% in December 2022, and clearly higher than the 39% who said they were carrying a balance in December 2021.
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