In total, U.S. citizens now owe a new record $1.17 trillion on their credit cards, according to a recent household debt report from the Federal Reserve Bank of New York, as explained in a CNBC report .

Importantly, credit card balances jumped $24 billion in the third quarter of 2024 and are 8.1% higher than a year ago, the CNBC report further details.

More Important Facts to Note

Despite the increase, credit card delinquency rates have improved, with 8.8 percent of balances past due over the past year, up from 9.1 percent in the previous quarter, the New York Fed found . This change could “suggest that the rising debt burden remains manageable,” New York Fed researchers said at a Nov. 13 news conference. “Overall, the balance sheets look pretty good for households,” the researchers added.

Credit card debt has remained stable over the past 20 years

Credit card debt has remained stable over the past two decades, but in the years following the pandemic, households largely spent their excess savings, triggering a rebound in credit card balances. Consumer spending remains strong, despite high borrowing costs.

This means that people now spend borrowed money more freely. But now, growth in credit card balances has slowed, according to a separate quarterly report from TransUnion on the credit industry outlook.

The average balance per consumer stands at $6,329, up just 4.8 percent year over year, compared to an increase of 11.2 percent the year before and 12.4 percent the previous year, TransUnion found. Over the past three months, 42 percent of Americans said their total debt had not changed, while 28 percent of them saw their debt increase, according to another survey conducted by Achieve, which helps consumers to manage their debts.

Among the latter group, most said the increase was due to continued difficulty making ends meet. Others cited general overspending and job loss or pay cuts. Achieve surveyed 2,000 adults with one or more types of consumer debt in October.

“Overall, unemployment is low and wages have increased, but these macroeconomic conditions are not felt equally across the population, especially for consumers who live in areas where the impact of unemployment “Inflation is the most important thing,” Brad Stroh, co-founder of Achieve. and co-CEO, said in a statement, mentioned in more detail in the CNBC report.

Credit card rates still exceed 20 percent

Yet credit cards have become one of the most expensive ways to borrow money. Low-income households, which have had to scramble to cope with rising prices, were hit very hard after the Federal Reserve’s series of 11 interest rate hikes raised the average credit card rate credit at more than 20 percent, close to a record level.

Even though the Fed lowers its benchmark, the average credit card rate has barely budged. For those with variable-rate debt, such as credit cards, “it will obviously help if rates fall,” the New York Fed researchers added. However, “the amount borrowed is more important than the interest rate,” they add.

This is an extremely worrying sign for the US government and the Federal Reserve. The world’s largest economy today faces serious challenges in financing its debt due to its size.