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Americans' credit card debt has reached a record high of $1.21 trillion, according to a report released by the Federal Reserve Bank of New York on Thursday (February 13). This increase is part of a broader rise in household debt, which now totals $18.04 trillion, encompassing credit cards, mortgages, auto loans, and student loans. In the last quarter of 2024, overall debt grew by $93 billion, with about half of that increase attributed to new credit card debt.
The rise in credit card debt is partly due to high interest rates and increased spending during the holiday season. New York Federal Reserve researchers expect balances to decline as consumers begin to pay down their debts at the start of the year. However, delinquencies, or missed payments, have also increased, reflecting financial strain on many households.
Credit card debt has grown significantly from $770 billion in early 2021 to $1.17 trillion by the third quarter of 2024. Many Americans are struggling to save and are living paycheck to paycheck. Individuals like Angela, a teacher in Virginia, have accumulated debt from medical expenses, while others face challenges due to job loss or high living costs.
In response to the growing debt crisis, Senators Bernie Sanders and Josh Hawley have introduced a bill to cap credit card interest rates at 10% for the next five years. President Trump has expressed support for this measure. Currently, the average credit card interest rate is 28.6%, despite banks borrowing from the Federal Reserve at less than 4.5%.
The report also highlighted that auto loan delinquencies remain elevated, with Americans holding nearly $1.7 trillion in auto loan debt. The high prices of new and used cars post-pandemic are contributing to these financial difficulties.