During the early days of the pandemic, consumers weren't breaking out their credit cards. Those days are behind us. Household debt is now surging, with credit card balances seeing their biggest rise in more than 20 years in the third quarter of this year, researchers say. The Federal Reserve Bank of New York says credit card balances rose $38 billion from the previous quarter. But the much bigger increase was the $282 billion rise in mortgage balances, according to the NY Fed. All told, household debt was up $351 billion from the quarter prior, marking the largest jump since 2007. America's collective household debt has now hit $16.5 trillion, up 2.2% from the previous quarter and 8.3% from a year ago, CNBC reports.
The rise in credit card debt shows "yet another dataset reverting to pre-pandemic patterns," per Axios. The NY Fed notes that despite higher interest rates, credit card holders appear to be coping with higher debt levels, with delinquency rates still lower than they were in the decade before the pandemic. "The real test, of course, will be to follow whether these borrowers will be able to continue to make the payments on their credit cards," researchers wrote.
The researchers found that there was a big disparity in credit card balances, with balances increasing for people between 30 and 59 years old and those in low-income areas but remaining below pre-pandemic levels among people 60 to 79 years old and those in higher-income areas, Bloomberg reports. The NY Fed notes that credit card debt is the most prevalent type of debt in the US, with more than 500 million open accounts. The researchers say half of American adults have more than one credit card and 13% have at least five. (More credit cards stories.)
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