US Credit Card Debt Reaches Record $1.17 Trillion

U.S. citizens now collectively owe a record-breaking $1.17 trillion in credit card debt, according to a report by the Federal Reserve Bank of New York, as detailed by CNBC. In the third quarter of 2024 alone, credit card balances rose by $24 billion, marking an 8.1% increase compared to the same time last year.

Despite this significant growth, delinquency rates have slightly improved. Over the past year, 8.8% of balances transitioned into delinquency, down from 9.1% in the previous quarter. Researchers from the New York Fed suggest this indicates that households are managing their rising debt loads. They added that, overall, household balance sheets remain in decent shape.

Credit card debt has largely remained stable over the past 20 years. However, after the pandemic, households began depleting their excess savings, leading to a rebound in credit card balances. Consumer spending remains strong, even as borrowing costs remain high.

Recent trends indicate that while consumers are still spending borrowed money, the growth of credit card balances has slowed. According to a separate report by TransUnion, the average balance per consumer is $6,329, reflecting a 4.8% year-over-year increase—a smaller rise compared to the double-digit increases seen in the previous two years.

A survey by Achieve found that 42% of Americans reported no change in their debt over the past three months, while 28% saw an increase. Among those whose debt rose, most attributed it to challenges in covering basic living expenses, overspending, or loss of income. Achieve’s October survey included 2,000 adults with various forms of consumer debt.

Brad Stroh, co-founder and co-CEO of Achieve, highlighted that despite low unemployment and rising wages, not all consumers benefit equally. In areas where inflation has hit hardest, lower-income households are particularly strained.

Credit cards remain one of the most expensive forms of borrowing, with average interest rates exceeding 20% following a series of 11 Federal Reserve rate hikes. Lower-income households, already stretched by rising costs, have been disproportionately impacted by these high rates. Although potential future rate cuts could provide some relief, researchers note that the overall borrowing amount often matters more than the interest rate.

The growing credit card debt signals a troubling trend for the U.S. economy. Both the government and the Federal Reserve face increasing challenges in addressing the nation’s debt burdens, which continue to expand to unprecedented levels.