For the first time ever, U.S. credit card debt has passed $1 trillion as of the end of Q2 2023, according to the New York Fed’s latest Quarterly Report on Household Debt and Credit. Balances increased by $45 billion in the second quarter amid rising interest rates.
Total household debt—which includes balances held on credit cards, auto loans, mortgages, student loans, and other consumer loans—reached $17.06 trillion. The increase was primarily driven by rising credit card and auto loan balances.
In addition to rising interest rates, inflation plays a major role in the record amount of credit card debt. As the cost of living increases, more consumers turn to their credit cards for essentials and leisure spending.
The average borrower carries a balance of $5,947, according to quarterly credit industry insights report from TransUnion.
Despite credit card balances reaching all-time highs, delinquency rates have only ticked up slightly. Serious delinquencies, those 90 days or more late, stood at 5.08% at the end of the second quarter vs. 3.35% in the same quarter last year.
Consumers could start to feel more pressure on their budgets when Federal student loan payments restart in October after being paused for more than three years. Missed student loan payments won’t be reported until Q4 2024.