Credit card balances in the United States have reached an unprecedented level, with collective balances climbing by $22 billion during the third quarter to total $1.29 trillion, according to research released by the Federal Reserve Bank of New York. This represents a 4.2% increase compared to the same period a year earlier. The average credit card balance per consumer now stands at $6,678, up 2.4% year over year, according to a separate quarterly report from TransUnion. Additionally, the number of people holding credit cards increased by 2% to 178 million.
The expansion in credit card debt reflects broader financial pressures facing American households. Total household debt, which includes mortgages, auto loans, and student loans, expanded by $334 billion during the July-to-September period to reach a record $19.1 trillion. Federal Reserve researchers attributed the growth to financial hardship, noting that macroeconomic headwinds including persistent inflation and elevated borrowing costs have squeezed consumer finances, particularly for low-income households where wage growth has lagged price increases.
Credit cards remain an expensive borrowing option, with the average interest rate on new credit card offers standing at approximately 24%, according to LendingTree data. Despite these high costs, consumers increasingly rely on credit cards because they offer greater accessibility compared to other loan types. An increasing share of newly issued credit cards has gone to borrowers with lower incomes and credit scores, and these accounts are showing higher levels of delinquency. Credit card issuers had loosened lending standards during the pandemic, contributing to rising delinquency rates in subsequent years.
The rising debt burden coincides with persistent cost-of-living increases, as Americans continue to pay more for essentials including groceries and gasoline. Inflation has consistently outpaced wage growth, particularly for lower-income households, creating an affordability squeeze that has prompted many households to accumulate additional debt. While the growth rate of credit card balances has slowed from earlier levels, analysts note that significant damage to household finances has already occurred as consumers remain in a debt-laden position.
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