Debt Balloons to New Highs as More Americans Struggle to Pay Bills

Samantha Miller

U.S. household debt rose sharply in the third quarter, hitting a new record high of $17.29 trillion as credit card balances swelled, auto loans increased, and more Americans fell behind on payments.

The 1.3% increase in total household debt from the previous quarter marked a $228 billion jump, according to data released Tuesday by the Federal Reserve Bank of New York. The rise was driven primarily by credit card spending as consumers continued to open their wallets despite high inflation and economic uncertainty.

Credit Card Debt Hits $1 Trillion

Credit card balances rose by $48 billion in the third quarter to surpass $1 trillion for the first time ever. The 4.7% increase from the previous quarter was the largest jump in more than 20 years, since the New York Fed began tracking the data in 1999.

Over the past year alone, credit card debt has spiked by $154 billion – an unprecedented annual increase. Experts say the surge reflects both strong consumer spending and stubbornly high inflation.

“Credit card balances experienced a large jump in the third quarter, consistent with strong consumer spending and real GDP growth,” said Donghoon Lee, an economic research advisor at the New York Fed.

Other lending categories also expanded last quarter, though more moderately. Auto loans rose by $22 billion to $1.6 trillion. Mortgages, the largest share of household debt, increased by $162 billion to $12.14 trillion. And student loans jumped by $30 billion to $1.6 trillion as the fall semester picked up.

Delinquencies On the Rise

Even as Americans took on more debt, a growing share struggled to keep up with payments. The New York Fed found delinquency rates rose across all major lending categories in the third quarter.

About 3% of total debt was in some stage of delinquency at the end of September – up 0.4 percentage points from the previous quarter. While still down from pre-pandemic levels in late 2019, the uptick marks a reversal from the historic lows reached in mid-2021.

The number of borrowers who fell behind on payments by 30 days or more spiked last quarter. This trend is particularly concerning, researchers said, as it could foreshadow further delinquency increases ahead.

Credit card delinquencies saw the sharpest rise, nearly matching prepandemic levels. About 8% of credit card debt transitioned into delinquency last quarter, compared to under 6% a year earlier. Delinquencies on auto loans also topped 2019 averages, reaching 7.4%.

The surge was especially pronounced among younger borrowers. Millennials aged 30-39 recorded significantly higher delinquency rates across all debt products compared to older generations.

Researchers said lower-income neighborhoods persistently saw the highest delinquency levels. But rates rose across all income brackets last quarter, indicating financial distress has broadened.

Positive Signs for Mortgages

The one bright spot was mortgages, where new delinquencies remained below 2019 trends. Just 0.7% of mortgage debt transitioned into delinquency last quarter – thanks in part to the strength of the housing market.

Foreclosure starts also dropped slightly, providing some reassurance for the housing sector. Only about 36,000 individuals faced new foreclosure notations in the third quarter.

Surprising Rise Amid Strong Economy

The sharp reversal in debt repayment is surprising given the still-strong labor market and economic growth, researchers noted. The U.S. has added jobs consistently, wages are up, and GDP expanded in the third quarter.

Yet the data indicates consumer finances are showing growing signs of strain. Determining the causes – and whether it represents a short-term blip or more serious household balance sheet deterioration – will be an important focus for economists in coming months.

For now, the debt increases and missed payment uptick paint a picture of Americans leaning heavily on credit cards and loans to maintain spending power. But as interest rates rise and economic uncertainty swirls, that precarious strategy could backfire if incomes fail to keep pace.

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Samantha Miller is a business and finance journalist with over 10 years of experience covering the latest news and trends shaping the corporate landscape. She began her career at The Wall Street Journal, where she reported on major companies and industry developments. Now, Samantha serve as a senior business writer for, profiling influential executives and providing in-depth analysis on business and financial topics.
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