Trapped in debt: Americans' credit card debt surpasses $1 trillion


An increasing number of cardholders are carrying more credit card debt than before in the United States, and it is likely keep growing, according to U.S. analysts.

With balances surpassing $1 trillion for the first time, Americans' credit card debt has reached a new milestone in the second quarter, according to data released Tuesday by the Federal Reserve Bank of New York.

From April to June, credit card balances shot up by $45 billion, nearly 4.6 percent, from $986 billion in the preceding three-month period.

About 69 percent of U.S. adults had a credit card account in the second quarter of 2023, compared with 65 percent in December 2019, data from the New York Fed showed.

Matt Schulz, chief credit analyst of online lending marketplace LendingTree, told The Washington Post that the $1 trillion mark is staggering and is likely going to keep growing from here.

The rise in credit card debt reflects several factors, including high living costs and rising consumer confidence amid cooling inflation. But there could be more difficult days ahead for some borrowers in a high-interest rate environment.

Federal student loan borrowers have not been required to repay their debt since 2020. The payment pause will resume in October, and the resumption of student loan payments will be a huge test for many cardholders.

Rising credit card debt and auto loan balances helped to drive overall household debt levels up 1 percent, to $17.06 trillion for the quarter, said the New York Fed, whose debt balances are nominal and not adjusted for inflation. Overall household debt has spiked by $2.9 trillion since the end of 2019, before the pandemic.

Compared to other debt categories this quarter, credit card balances saw the most pronounced worsening in performance, following a period of extraordinarily low delinquency rates during the pandemic, the New York Fed said.

Credit card delinquencies are at an 11-year high, as measured using a four-quarter average, the data showed. Delinquencies in the credit card debt category were at 5 percent in the second quarter, increasing from 3 percent during the same period last year.

The data also showed that young adults are struggling the most. According to the New York Fed, U.S. millennials in their 30s have racked up debt at a historic clip since the pandemic. Their total balances hit more than $3.8 trillion in the fourth quarter of 2022, a 27-percent jump from late 2019.

A recent poll by Lending Club found that 57 percent of American consumers say they are living paycheck to paycheck. More than 72 percent of people making less than $50,000 a year live paycheck to paycheck, while 60.9 percent of people making between $50,000 and $100,000 annually live that way, according to the poll.

Ted Rossman, a senior industry analyst at consumer financial services company Bankrate, said that credit card debt is easy to get into and hard to get out of, and unexpected expenses, such as car repairs and medical bills, are the main reason for carrying credit card debt.

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