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U.S. Credit Card Debt Surpasses $1 Trillion, and Here’s What It Means for the Average Spender

Elinor Rozenvasser Updated: August 10, 2023 • 3 min read

The credit landscape in the U.S. is changing rapidly, and if you're an avid credit card user, this is something you should definitely be aware of. The financial rumblings are becoming hard to ignore, with the most recent statistics showing a notable shift in how Americans manage their finances.

A Historic Leap in Credit Card Usage

It's now official. The collective U.S. credit card debt has soared past the significant $1 trillion benchmark this summer, as per the reports from the New York Federal Reserve. It's not just a statistic; it's a historic landmark that's set a precedent.

To give you a clearer picture of this financial leap: From April to June, there was an increase of a staggering $45 billion in credit card debts. The new total stands at $1.03 trillion, surpassing all previous records since the inception of data collection in 2003.

The surge isn't restricted to just credit card debt. The overall household debt is catching pace as well, with the latest figures setting a new benchmark at $17.06 trillion. It's an upward trend, painting a broader picture of American financial habits.

The Side Effects? Rising Delinquencies

With greater credit card usage comes the inherent risk of delayed payments. Recent data has shown that the percentage of individuals delayed by more than 30 days on their card payments surged to 7.2%. This is a considerable increment from the prior 6.5% recorded in previous months. It's a wake-up call and a reflection of the mounting pressures on consumers.

Joelle Scally, a renowned expert from the New York Federal Reserve, weighed in on this trend. While highlighting the substantial growth in credit card balances, she also emphasized a positive angle. She pointed out that the current delay in payment rates aligns closely with figures seen before the global pandemic struck. It offers a perspective that, while the numbers are high, they aren't unprecedented.

“While delinquency rates have edged up, they appear to have normalized to pre-pandemic levels.”

Credit Card Madness: Driving Factors

So, what's propelling this sudden spike in credit card usage? A deeper dive suggests two primary culprits:

  1. Rising inflation
  2. Amplified consumer spending

These economic factors have nudged more Americans towards credit card transactions.

And here's a twist: Despite the increased dependency on cards, there's a lesser inclination among consumers to apply for new ones. Why? Banks have been reported to tighten their credit issuance standards, becoming more discerning about their clientele.

A Glance at Other Debts

While credit card debts have been the talk of the town, it's essential to also cast an eye on other forms of debt. The landscape of mortgages, auto loans, and student loans has also shifted. Mortgage loans witnessed a $393 billion rise, auto loans grew by $20 billion, and student loans showed a marginal decrease. The dip in student loans can likely be attributed to the expected lifting of the payment freeze.

So, what's the takeaway?

Credit card usage is on the rise, and it's vital to be smart about it. With more of us relying on credit, it's a perfect time to make sure we're using the best card for our needs, and knowing how many credit cards is too many. Stay astute, stay informed, and above all, make choices that bolster your financial well-being. 

Stay astute, stay informed, and above all, make choices that bolster your financial well-being.

Elinor Rozenvasser is a content writer and editor with a knack for finance. She holds a Bachelor's in Communications and Business from Reichman University, and has been swimming alongside finance specialists for over a decade. She's not your typical financial writer, though. She's more likely to use witty puns and sarcasm than jargon and technical terms. But don't let that fool you. She's still a whiz when it comes to explaining complex financial concepts in a way that anyone can understand. If there's any writer who can make finance fun and engaging, Elinor is your girl. She's sure to leave you laughing (and learning) long after you've finished reading her work.