Americans owe a record $1.17 trillion on their credit cards, according to the Federal Reserve Bank of New York.
Balances rose by $24 billion in the third quarter of 2024, an 8.1% year-over-year increase, as consumers continued to navigate the aftermath of the pandemic and the pressure of high borrowing costs.
Despite the uptick in debt, delinquency rates have slightly improved.
The New York Fed reported that 8.8% of balances transitioned into delinquency over the past year, compared to 9.1% in the previous quarter. Researchers suggested this could indicate that “rising debt burdens remain manageable.”
Balancing Act for Households and Businesses
While credit card balances have risen sharply in recent years, growth has started to slow.
A TransUnion report highlighted that the average balance per consumer is now $6,329—up 4.8% year-over-year but significantly lower than the double-digit increases seen in previous years.
This trend may reflect a leveling off in spending patterns as households adjust to economic realities.
Achieve’s survey of 2,000 adults with consumer debt paints a complex picture. While 42% reported no change in their debt levels over the last three months, 28% saw their debt increase.
The rise was mainly attributed to ongoing struggles with covering daily expenses, overspending, and job or wage loss.
Brad Stroh, Achieve’s co-CEO, noted that economic gains like low unemployment and rising wages are not evenly felt, particularly in regions hardest hit by inflation.
Interest Rates Weigh Heavy on Borrowers
Credit card rates remain steep, averaging over 20%—near historic highs—after the Federal Reserve’s 11 interest rate hikes.
Lower-income households, already stretched thin by rising costs, have been hit especially hard.
Even as the Fed’s benchmark rate potentially softens, researchers emphasized that “the borrowing amount is more important than the interest rate” for consumers managing variable-rate debt like credit cards.
The numbers underscore a tenuous balancing act for U.S. households and the broader economy.
While spending resilience has kept the wheels turning, growing financial pressures signal a need for careful recalibration as consumers and businesses face an uncertain future.
You May Also Like:
