US Credit Card Debt Notches New High of $1.14 Trillion

Credit card debt in America reached another record high in the second quarter of 2024, according to the latest Household Debt and Credit Report from the Federal Reserve Bank of New York.

The outstanding balance grew to $1.14 trillion, an increase of $27 billion from the prior quarter, and has now stubbornly remained at or near this figure for three consecutive quarters. Credit card delinquencies, defined as being more than one month behind on required minimum payments, also went up, reaching an annualized rate of 9.1%. 

"I wish I could say I was surprised, but I'm not," said Mark Elliot, chief customer officer of LendingClub. "One of the things we have seen over the last several years is an uptick in consumers' reliance on credit cards, largely driven not by unemployment, as we've seen in the past, but by inflation and making ends meet day-to-day."

In addition to a record-high balance, average credit card APRs reached 21.51% in November, just shy of the record-high 21.59% reached in Q1 of 2024, according to the latest data from the Federal Reserve. Together, higher debt balances and higher APRs create a one-two punch that further exacerbates the credit card debt crisis.

Many are borrowing more money to make ends meet -- and it's not just credit card debt on the rise. Home equity lines of credit (HELOCs) increased by $4 billion, the ninth consecutive quarterly increase, and auto loan balances increased by $10 billion in the same 90-day period, the FRBNY report found. Some are also leaning more into short-term loans in the form of buy now, pay later; use of BNPL on Cyber Monday 2023 rose 42.5% year-over-year, according to Adobe Analytics.

Federal student loan repayment may be contributing to credit card users' distress. Repayment resumed last October for an estimated 44 million borrowers, giving them one more monthly debt payment to manage. Borrowers were given a grace period through Sept. 30, 2024, to start repaying their loans without affecting their credit score, so we won't know the full impact of payment resumption until next fall.

Household debt and credit reports in 2024

If you're struggling with credit card debt, get back to basics with a clear budget and payoff plan. Look into getting a balance transfer credit card that has a longer balance transfer period, which can give you relief from interest payments for some time and help you make a dent in your debt. If your debts feel insurmountable, consider a debt consolidation loan or debt settlement options. 

To prevent debt in the future, consider treating your credit card like a debit card to avoid overspending. If you're someone who tends to carry a balance, resist the temptation to get another credit card for the signup bonus alone, as the interest accrued will quickly cancel out any perks or rewards.

"Develop a repayment strategy. Look for options to consolidate," Elliot said. "There are lots of educational resources out there to help you get to a better place."