WASHINGTON — $1.13 trillion.
The number is tough to grasp, but that's the collective amount Americans now owe on their credit cards, according to a report from the Federal Reserve Bank of New York.
During the fourth quarter, credit card balances jumped by $50 billion, or roughly five percent. The report found U.S. household debt hit a fresh high of $17.5 trillion, up 1.2% from three months prior.
New York Fed researchers said higher balances can be attributed to population growth, an increase in online spending, the surging cost of new and used cars, as well as economy-powering consumeractivity. And while rising debt levels during the fourth quarter shouldn’t come as a surprise — holiday spending typically brings heftier credit card balances.
But what researchers are really focusing in on is how much people are falling behind on payments.
Financial stress is growing at a time when debt has become very expensive. Americans, already weighed down by nearly three years of high inflation, now have to contend with painfully high interest rates.
During the fourth quarter, an annualized 8.52% of credit card balances and 7.69% of auto loan balances became delinquent, marking the highest annualized rates since the second quarter of 2011 and the fourth quarter of 2010, New York Fed data shows.
Rates of delinquency were particularly notable among younger millennials between the ages of 30-39 who are also dealing with the resumption of student loan debt.
A ‘bad omen’
While student loan delinquency rates may be their lowest on record, New York Fed researchers believe the resumption of payments has contributed to increased financial stress, especially for adults between 30 and 39 years old.
As such, things might get much worse before they get better, Matt Schulz, chief credit analyst at LendingTree, told CNN in an interview.
“Even though we’ve hit peak inflation, it seems inflation hasn’t disappeared,” he said. “Interest rates are still high, delinquencies are rising, and a lot of people haven’t fully begun repaying their student loans — because they haven’t necessarily had to yet."
