US household debt topped $16 trillion for the first time in the second quarter, the New York Federal Reserve said on Tuesday.
Even as borrowing costs rose, the NY Fed said credit card balances grew by $46 billion last quarter.
Over the past year, credit card debt has grown by $100 billion, or 13%, the biggest percentage increase in more than 20 years. Credit cards often charge high interest rates when balances are not paid in full, making it an expensive form of debt.
The NY Fed researchers wrote in a blog post: “The impact of inflation is evident in the large number of loans.
Not only did credit card balances increase, but Americans opened 233 million new credit card accounts in the second quarter, the most since 2008, the NY Fed report shows.
Despite rising debt levels, the NY Fed said consumer balance sheets generally appear to be “in a solid position”.
Most of the 2% quarter-over-quarter increase in U.S. household debt to $16.2 trillion was due to a spike in mortgage borrowing. Student loan balances were little changed at $1.6 trillion.
“Although debt balances are growing rapidly, households as a whole have weathered the pandemic significantly,” the NY Fed said in the report, noting unprecedented support from the federal government. state during the onset of Covid-19.
However, there are suggestions that some lower-income and subprime borrowers are currently struggling to keep up with their bills.
“With past pandemic support policies, there are borrowers who have begun to show distress on their debt,” the report said.
Aided by environmental protection policies and embargo programs, foreclosures remain at “very low levels,” according to the report.
Still, credit reports showed the number of new foreclosures rose 11,000 in the second quarter, the NY Fed said, potentially signaling a “beginning to return to more typical levels.”