NY Fed: U.S. Credit Card Balances Reach Nearly $1 Trillion

The New York Fed’s Household Debt and Credit Report found that credit card balances rose to a record high of $986 billion in the fourth quarter of 2022 amid high prices and consistent consumer spending. Total credit card debt rose $61 billion from the quarter before and was the biggest increase seen in data going back to 1999.

“It’s triple trouble for credit card borrowers,” said Ted Rossman, a senior Bankrate analyst, according to Bloomberg. “Balances are up, rates are up and more people are carrying credit card debt.” He added that 46 percent of credit card holders are currently carrying debt, an increase from 39 percent a year ago.

At the beginning of 2021, credit card balances fell 17 percent from the pre-pandemic high as stimulus checks helped consumers build savings and pay down balances. Now however, inflation has driven up costs for consumers and the Federal Reserve’s frequent rate hikes pushed credit card interest rates to almost 20 percent.

The report found that borrowers are not only using credit cards more, but they are also missing more payments as delinquency rates have passed normal, pre-pandemic levels. Just over 4 percent of credit card debt has developed to serious delinquency, meaning a failure to pay for 90 days or more.

Credit card balances expanded by $130 billion from December 2021 to December 2022, the largest recorded annual growth. With the Fed continuing to raise interest rates, economists anticipate credit card borrowing costs to hit a 40-year high in 2023.