The Federal Reserve Bank of New York announced that US consumer credit card debt has jumped to nearly $1 trillion.
And a report issued by the bank found that credit card balances increased by more than $ 60 billion over the three months ending in December 2022, which raised the total amount of American credit card debt to an all-time high of $ 986 billion, which Exceed previous record of $927 billion, which was set in the fourth quarter of 2019.
The US Federal Reserve report also revealed that the total debt of US households reached a record level of $16.9 trillion during the fourth quarter, an increase of $394 billion, or 2.4%, over the previous three-month period, and the “lion’s share” of the debt was attributed to mortgages. real estate.
The report also showed that not only are credit card balances ballooning at record levels, but late payments are also on the rise.
According to the Federal Reserve, at the end of 2022, there were 18.3 million borrowers in arrears on credit card debt, compared to 15.8 million in arrears at the end of 2019.
Particularly younger borrowers, in their 20s and 30s, are struggling to make payments on car loans and credit cards, the Federal Reserve Bank of New York researchers said.
American credit card debt is in a constant cycle
“Record credit card debt is sounding alarm bells about the health of American borrowers, despite a booming job market that has the lowest unemployment rate in more than 50 years,” said Wilbert van der Klaau, an economic research adviser at the Federal Reserve Bank of New York, in a statement. years.”
“Although historically low unemployment rates have kept consumer finances generally strong, stubbornly high prices and high interest rates may be a test of the solvency of some borrowers,” Van der Klaau adds.
Ted Rossman, senior analyst at Bankrate.com, which focuses on the credit card industry, points out that “before, a lot of people might not have enough income.” To support daily expensesSo they rely on the credit card, and that’s where it turns into a cycle of debt, unfortunately.”