Credit card balances hit a record $1.29 trillion in the third quarter, climbing $22 billion from the prior quarter, according to the Federal Reserve Bank of New York. Balances rose 4.2% year over year.
The average credit card balance per consumer now stands at $6,678, up 2.4% annually, TransUnion found. The number of people holding credit cards increased 2% to 178 million from 174.8 million.
New credit card offers carry an average interest rate of about 24%, according to LendingTree data. "Credit cards continue to be one of the most expensive ways to borrow," said Charlie Wise, TransUnion's senior vice president of global research and consulting.
Total household debt, including mortgages, auto loans and student loans, expanded by $334 billion in the July-to-September period to reach a record $19.1 trillion.
The New York Fed researchers attributed the climb to financial hardship. Macroeconomic pressures including high inflation and rising borrowing costs have squeezed consumers, particularly those in low-income brackets where wage growth has lagged inflation. Consumers often turn to credit cards because they are more accessible than other loan types.
Credit card issuers loosened lending standards during the Covid pandemic. Over time, an increasing share of new credit cards has gone to borrowers with lower incomes and credit scores, and those accounts now show higher levels of distress, the New York Fed said.
Ted Rossman, principal consumer finance analyst at Money Management International, noted that balances have continued to climb since the pandemic. He stated that "higher prices and higher rates have pushed more people into debt" and that "a lot of damage has been done" to household finances even as growth rates slow.