Credit card debt climbs to a record $1.29 trillion, New York Fed research finds

Credit card balances climbed $22 billion in the third quarter to a record $1.29 trillion, the Federal Reserve Bank of New York reported Tuesday, pushing total household debt to $19.1 trillion. The 4.2% year-over-year increase in card debt coincides with October inflation data that again exceeded expectations, leaving groceries, rent and gas consuming a larger share of paychecks that have not kept pace, especially for lower-income households. New York Fed researchers said plainly on a press call that the growth "reflects financial hardship out there," and their accompanying blog post traced the strain to pandemic-era loosening of lending standards that funneled new cards to borrowers with weaker credit scores — accounts now showing rising distress.

The mechanics of the squeeze are visible in the numbers. TransUnion puts the average card balance at $6,678, up 2.4% from a year ago, while the number of cardholders grew 2% to 178 million. LendingTree data show the average rate on a new card offer hovering near 24%, making revolving credit one of the most expensive ways to borrow. Yet cards remain more accessible than personal loans or home-equity lines, so families facing a cash-flow gap reach for plastic even as the math compounds against them. Charlie Wise of TransUnion underscored the trap: "Credit cards continue to be one of the most expensive ways to borrow."

Delinquency trends reveal a split picture. The share of card balances rolling into early delinquency dipped slightly last quarter, a signal that the newest vintages — issued since early 2023 to higher-score borrowers — are performing better. But auto loans, mortgages and student loans all saw delinquency shares rise, and 5.0% of total household debt is now in some stage of delinquency, up from 4.7% three months earlier. Student loans 90-plus days past due climbed to 10.9%. The New York Fed expects card delinquencies to keep improving absent economic shocks, yet the overall delinquency uptick suggests the hardship is broadening beyond revolving credit.

Ted Rossman of Money Management International framed the trajectory bluntly: balances have swollen since the pandemic, and even though the growth rate is slowing, "a lot of damage has been done" to household balance sheets.