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Credit-Card Balances in the US Top $1 Trillion for First Time

Credit-Card Balances in the US Top $1 Trillion for First Time
A customer signs for a purchase with a Barclaycard MasterCard Inc. chip credit card at a Wal-Mart Stores Inc. location in Burbank, California, U.S., on Tuesday, Nov. 22, 2016. Consumer hardline retailers are hopeful Black Friday will provide a strong start to the holiday shopping season, but any lift may come at the expense of margins, as the landscape has become increasingly promotional. Photographer: Patrick T. Fallon/Bloomberg

Credit-card balances surpassed $1 trillion for the first time last quarter in data from the Federal Reserve Bank of New York, showing how even more widespread credit has become among American consumers as the US economy recovered from the pandemic. 

Balances increased by $45 billion, the most of all debt types, to $1.03 trillion in the second quarter, the New York Fed said in a report Tuesday. The percentage of Americans who are behind in their payments has also been on the rise. Delinquency rates have now returned to pre-Covid levels, but the two most recent quarters “appear to show some stabilization,” New York Fed economists wrote in a blog post.

“Despite the many headwinds American consumers have faced over the last year — higher interest rates, post-pandemic inflationary pressures, and the recent banking failures — there is little evidence of widespread financial distress for consumers,” the economists wrote in the post.

Credit card holders have, in aggregate, $3.6 trillion in additional credit availability.

Auto Loan and	Credit Card Balances
 | US consumers have added more than $1 trillion in aggregate credit card and car loan debt over the past decade

Total US household debt rose by 0.1% to a record $17.06 trillion last quarter, according to the New York Fed, whose data go back to 2003.

A separate report from the US Federal Reserve indicated that the interest-rate for credit cards reached a record high of 22.2% in May. More than 70 million new credit card accounts have been opened since the start of pandemic.

Credit Card Debt Surge | US credit card debt is up almost $150 billion over the past year

Auto-loan balances rose by $20 billion to $1.58 trillion, and exceeded student debt for the first time since 2009, the New York fed report shows. The volume of newly originated auto loans, which includes leases, was $179 billion.

Student-loan balances fell by $35 billion and stood at $1.57 trillion. Federal student loan payments remain suspended until October.

More than 70% of household debt is made up of mortgage balances. They were largely unchanged last quarter, at $12 trillion. Slow mortgage origination growth due to a sharp uptick in interest rates have kept depressed home-purchase applications.

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