American credit card debt increases as inflation hits consumers

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American credit card debt report overview: 

• Who: The Federal Reserve Bank of New York released a report on total debt from the second quarter between April and June. 
• Why: The New York Fed report showed, among other things, that credit card balances rose by $46 billion in the second quarter and that the total number of credit card accounts increased, as well. 
• Where: The report is relevant to consumers nationwide. 

Credit card and household debt have rapidly increased in the United States in the wake of record inflation, according to a report released by the Federal Reserve Bank of New York. 

Balances for credit cards rose to $46 billion in the second quarter between April and June — a rise of 5.5% from the first quarter — while the total number of credit card accounts increased as well, according to the New York Fed. 

The New York Fed said the debt amount increased by a total of 13% since the second quarter of 2021, representing the largest rise in more than 20 years. 

“Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices,” researchers for the New York Fed write. 

Consumers opened a total of 233 million new credit card accounts in the second quarter — the most since 2008 — according to the report, which noted that delinquency rates remain more or less low despite the rise in accounts. 

The total amount of credit card debt in the United States rose to $890 billion in the second quarter, representing a $100 billion year-over-year increase, The Washington Post reports.

Household debt balances increased since pandemic, New York Fed says

Household debt, meanwhile, increased by a total of $312 billion from the first quarter, a rise of 2%, while mortgage and auto loan balances also increased in the second quarter, according to the New York Fed report. 

“The second quarter of 2022 showed robust increases in mortgage, auto loan and credit card balances, driven in part by rising prices,” Joelle Scally, administrator of the Center for Microeconomic Data at the New York Fed, says in the report. 

The New York Fed noted total household debt balances are a total of $2 trillion more than what they were at before the pandemic began. 

“While household balance sheets overall appear to be in a strong position, we are seeing rising delinquencies among subprime and low-income borrowers with rates approaching pre-pandemic levels,” Scally says. 

In related news, the Consumer Financial Protection Bureau released an advisory opinion earlier this year affirming that debt collectors cannot legally charge pay-to-pay fees. 

Have you seen your credit card debt or household debt increase? Let us know in the comments.

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