The Blubber

Americans collectively owe a record $1.21 trillion on their credit cards, according to the latest quarterly household debt report from the Federal Reserve Bank of New York.

In the fourth quarter of 2024, credit card balances surged by $45 billion—driven in part by holiday spending—marking a 7.3% increase compared to a year ago.

At the same time, credit card delinquency rates “remained elevated,” with 7.18% of balances becoming delinquent over the past year, the New York Fed reported. That rise suggests that “borrowers are having some difficulty repaying,” researchers said during a press call on Wednesday.

“No one should be surprised that credit card debt hit another record high,” said Matt Schulz, chief credit analyst at LendingTree and author of Ask Questions, Save Money, Make More.

“Stubborn inflation has shrunk a lot of Americans’ financial margin for error from slim to about none, forcing people to lean more heavily on credit card debt,” Schulz said.

Credit Card Debt Trends

While credit card debt has remained relatively steady over the past two decades, balances have surged in the post-pandemic years as households depleted excess savings. Despite high borrowing costs, consumer spending remains strong.

“There’s very little reason to believe that we won’t continue to see new credit card debt records being set going forward,” Schulz added.

Credit Card Rates Remain Above 20%

Credit cards are now one of the most expensive ways to borrow. Lower-income households, already stretched thin by rising costs, have been hit especially hard after the Federal Reserve’s series of interest rate hikes pushed the average credit card rate above 20%—near historic highs.

Even as the Fed lowered its benchmark rate at the end of last year, average credit card rates barely budged.

“For people who are carrying a balance … a higher interest rate is going to make those balances rise more quickly, it’s also going to make the payments higher on a monthly basis,” the New York Fed researchers noted.