U.S. Credit Card Debt Reaches $1.08 Trillion as Delinquencies Rise

According to the Q3 2023 Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York, Americans now owe $17.29 trillion in household debt. For the first time, that total includes more than $1 trillion in credit card debt

Table of Contents
  1. Aggregate Credit Card Balances Climb Rapidly
  2. Other Household Debt in Q3 2023
  3. Increased Delinquency Rates for Most Types of Household Debt
  4. What Types of Debt are Most Delinquent?
  5. Household Debt in California
  6. Is Rising Debt Affecting Your Household?
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Aggregate Credit Card Balances Climb Rapidly

Credit card balances increased by $48 billion from Q2 to Q3–a 47% increase in just one quarter. That’s not an isolated jump. Total outstanding credit card debt increased by $154 billion year-over-year. Part of this new credit card spending was enabled by a $113 billion increase in aggregate credit card limits. More than 200 million new credit card accounts were opened in the 12 months ending with Q3 of 2022.

Consumer spending has contributed to strong economic growth this year. The GDP is up 4.9% year-over-year. But there’s a downside to those growing credit card balances. The percentage of credit card debt that was at least 90 days past due jumped in Q3. The percentage transitioning into delinquency nearly doubled between Q3 of 2022 and Q3 of 2023, and so did the percentage transitioning into serious delinquency.

Other Household Debt in Q3 2023

While credit card debt made a substantial contribution to the overall rise in household debt, aggregate balances rose across the board. New mortgage originations slowed, but the total outstanding mortgage debt increased by $126 billion. Auto loan balances increased by an aggregate $13 billion. And, student loan debt rose by $30 billion, to a total of $1.6 trillion. Other household debt, such as retail credit cards and consumer loans, increased by $2 billion.

Increased Delinquency Rates for Most Types of Household Debt

In Q3, 3% of debt was delinquent. That’s up slightly from Q2, and also year-over-year. Overall, though, the percentage is comparatively low. While the percentage of debt in some state of delinquency was below 3% from Q2 of 2021 through Q2 of 2023, those were record lows for the decade. At the beginning of 2003, the percentage of debt in delinquent status was about 5%, and that rate reached nearly 12% during the Great Recession. The current rate is well below the pre-pandemic rate of 4.7%.

What Types of Debt are Most Delinquent?

Credit card debt has the largest percentage of seriously delinquent debt, with more than 9% at least 90 days past due. 8% of outstanding credit card debt transitioned into delinquency (meaning it was at least 30 days past due) in Q3. The percentage of auto loan debt transitioning into delinquency was nearly as high, though the overall percentage of auto loan balances that were seriously delinquent was less than half that for credit card debt.

The percentage of mortgage debt and balances on home equity lines of credit that was seriously delinquent remained below 1%, though each ticked up slightly. The percentage of mortgage loans transitioning into delinquency has been on the rise since mid-2021.

The wild card in terms of consumer debt this quarter is student loan debt. Because late or missed payments aren’t currently being reported to credit reporting agencies, there’s no clear measure of the percentage of loans that may currently be delinquent. Some student loan borrowers who were delinquent before the pandemic have been offered new options for getting out of default, and the Biden administration has canceled or forgiven at least $127 billion in student loan debt. Those efforts seem to be continuing. And, some borrowers were able to pick up loan payments when the freeze ended and others were not. So, it remains to be seen how many loans are still in delinquent status. Reporting won’t resume until Q4 of 2024.

Household Debt in California

Households in Los Angeles and throughout California have higher average debt than in most areas of the country. That’s due in large part to high home prices. In fact, aggregate mortgage debt in California is higher than the total aggregate debt in many U.S. states. The percentage of total debt that is more than 90 days past due in California remains below the national average, but has taken a slight turn upward in Q3.

Is Rising Debt Affecting Your Household?

The past few years have been a financial roller coaster for many households. Some found themselves unable to cover existing debt payments when shutdowns interrupted their employment more than three years ago and still haven’t fully recovered. Some took on debt to get through those unstable days. Inflation hit hard. And, of course, the same sorts of events that shake people’s finances in “normal” times are still happening–job loss, illness, divorce, and other major disruptions.

If you’re struggling to get out from under debt, you owe it to yourself and your family to explore your options. The best first step is to schedule a free consultation with an experienced debt relief lawyer. At Borowitz & Clark, we’ve helped thousands of Californians get out of debt. To learn more about how we may be able to help you, call 877-439-9717 or fill out the contact form on this page.

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