According to statistics from the Federal Reserve Bank of New York, credit card balances reached $1 trillion for the first time last quarter, illustrating how credit has become even more pervasive among American consumers as the US economy has recovered from the crisis.
The New York Fed said on Tuesday that balances climbed by $45 billion, the largest rise of all debt kinds, to $1.03 trillion in the second quarter. Additionally, a greater proportion of Americans are now behind on their payments. However, the two most recent quarters “appear to show some stabilisation,” according to a blog post by New York Fed analysts. Delinquency rates have now reverted to pre-Covid levels.
There is no indication of widespread consumer financial distress, the economists stated in the essay. “Despite the many challenges American consumers have faced over the last year — higher interest rates, post-pandemic inflationary pressures, and the recent banking failures,” they wrote.
A total of $3.6 trillion in extra credit is available to credit card holders.
The New York Fed, whose records date back to 2003, said that the total US household debt increased by 0.1% to a record $17.06 trillion last quarter.
According to a different report from the US Federal Reserve, credit card interest rates hit a record high of 22.2% in May. Since the beginning of the epidemic, more than 70 million new credit card accounts have been created.
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According to the New York Fed study, auto loan balances increased by $20 billion to $1.58 trillion, surpassing student loan debt for the first time since 2009. There were $179 billion in newly generated vehicle loans, including leases.
Student loan balances were $1.57 trillion after a $35 billion decline. Up until October, there will be no federal student loan payments.
Mortgage debt makes up more than 70% of all family debt. At $12 trillion, they stayed fairly constant over the previous quarter. Low demand for house purchases has been maintained by the slow growth in mortgage originations brought on by a sudden rise in interest rates.
