Americans put another $21 billion on their credit cards between April and June, pushing total card balances to $1.26 trillion — within reach of the $1.28 trillion record set late last year, according to the Federal Reserve Bank of New York’s quarterly report on household debt released Aug. 11.
The rest of the household ledger actually shrank. Total debt fell $13 billion to $18.8 trillion, held down by mortgages, which dropped $74 billion to $13.1 trillion, and student loans, which fell $7 billion to $1.65 trillion. Auto loans went the other way and set a record of their own, rising $28 billion to $1.71 trillion. Home equity lines added $13 billion to reach $459 billion.
So the story is not that families are borrowing more overall. It is where the borrowing is happening. Mortgage debt is cheap, fixed and tied to a house. Credit card debt carries the highest interest rate most households will ever pay, and it is the one line that keeps climbing.
The number drawing the most attention is 12.8% — the share of card balances that are more than 90 days past due. That figure has climbed from 7.6% in late 2022, which works out to roughly 1 in 8 dollars owed on cards now sitting three months or more unpaid, up from about 1 in 13 four years ago. It is the worst reading since the years following the 2008 crash.
The Fed’s own researchers, though, urge caution on that figure, and the distinction matters for anyone trying to read the health of the American consumer. The 12.8% measures the pile of debt already stuck. A separate measure tracks how many accounts newly fall behind each quarter — and that one has barely moved in almost two years. In other words, the number of households getting into trouble is not rising; the households already in trouble are staying there longer, so the balance keeps accumulating.
“Delinquency rates across most products have held steady over the past two years,” said Joelle Scally, economic policy advisor at the New York Fed. “Still, new delinquencies for auto loans and credit cards remain at elevated levels, a trend we’ll continue to monitor.”
Lenders are not pulling back. Total credit limits on cards rose $85 billion in the quarter, up 1.1%, meaning banks are extending more room to borrow even as balances rise. Of the roughly 175 million Americans with a credit card, about 60% carry a balance from month to month rather than paying it off — that is roughly 105 million people paying interest on everyday purchases.
Fed researchers describe the result as a K-shaped economy: one group of households riding rising wages and home values, another with almost nothing between one paycheck and the next. For families in the second group, the practical takeaway is straightforward. Card interest is now the most expensive money in the household budget, and the fastest available relief is moving that balance onto a lower-rate personal loan or credit union line before the interest compounds further.
JBizNews Desk | New York
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