US credit card debt hits record $1.29 trillion in third quarter

Credit card balances in the United States rose by $22 billion in the third quarter to reach a record $1.29 trillion, according to the Federal Reserve Bank of New York's household debt report released today. The balances increased 4.2% compared to the same period last year.

Total household debt, which includes mortgages, auto loans and student loans, grew by $334 billion during the July-to-September period to a record $19.1 trillion.

"Overall debt has been growing," New York Fed researchers said on a press call today. "This does reflect financial hardship out there."

The average interest rate on a new credit card offer stands at approximately 24%, according to LendingTree data. Credit card annual percentage rates vary based on the card type, issuer and borrower's creditworthiness.

A growing portion of new credit cards has been issued to borrowers with lower incomes and credit scores, and "those accounts are now showing higher levels of distress," the New York Fed researchers said in a blog post.

Credit card issuers relaxed their lending standards during the Covid pandemic, and delinquency rates increased in subsequent years, the researchers said on the press call.

"Macroeconomic headwinds — namely high inflation and rising borrowing costs — have squeezed consumers, with inflation outpacing wage growth for low-income brackets," according to the New York Fed.

The cost of living continues to rise, with Americans paying more for essentials such as groceries and gas. The Bureau of Labor Statistics reported today that costs for goods and services rose more than expected in October.