NEW YORK–Americans struggling to keep up with inflation and the ever-higher cost of living are piling up more credit card debt, according to the New York Fed.
New data from the New York Fed shows U.S. household debt surpassed $16 trillion for the first time ever during the second quarter, with credit card balances increasing by $46 billion in Q2.
The New York Fed data show that over the past year, credit card debt has jumped by $100 billion, or 13%, the biggest percentage increase in more than 20 years. That has taken place at the same time interest rates have been rising.
"The impacts of inflation are apparent in high volumes of borrowing," N.Y. Fed researchers wrote in a blog post cited by the New York Times.
“Not only are credit card balances rising, but Americans opened 233 million new credit card accounts during the second quarter, the most since 2008, the N.Y. Fed report found,” the report added.
Yet despite the higher levels of debt, the New York Fed said consumer balance sheets appear to be in a "strong position" overall, the Times noted.
Big Jump in Mortgage Debt
The data show most of the 2% quarter-over-quarter increase in U.S. household debt to $16.2 trillion was driven by a jump in mortgage borrowing. Student loan balances were little changed at $1.6 trillion.
By and large, Americans continued to pay down debt on schedule last quarter, a reflection of the very strong job market, the Times added, noting the N.Y. Fed said the share of current debt transitioning into delinquency remains "historically very low," though it did increase modestly.
"Although debt balances are growing rapidly, households in general have weathered the pandemic remarkably well," the N.Y. Fed said in its report, cited unprecedented assistance from the federal government during the onset of Covid-19.
The Fed bank’s report indicated, however, there are hints that some lower-income and subprime borrowers are now struggling to keep up with their bills, according to the Times, finding the delinquency transition rate for credit cards and auto loans is "creeping up," especially in lower-income areas.