US credit card debt climbs to $1.26tn, nearing last year’s record high

Credit card debt in the United States is approaching a record high, climbing from $54 billion to $1.26 trillion between April and June. This figure is just shy of the previous record of $1.28 trillion, as reported by the Federal Reserve Bank of New York.

“

A lot of this is feeding your kids, going into stores, people buying their school supplies, the groceries, the baby formula, the diapers. I’m sure a lot of those people have to carry a balance because they are just simply strapped economically.

During the second quarter, credit card debt rose by $21 billion, or 1.7%, indicating that Americans entered the summer months with a greater debt burden than at the beginning of the year. While mortgage and student loan balances saw slight decreases, other debt products, including credit cards, experienced increases.

Concerns about household financial stress are mounting, with credit card delinquencies (payments more than 90 days past due) rising significantly. Although the overall share of household debt in delinquency fell slightly in the April-June period, rates have reached levels not seen since the Great Recession.

“

A lot of it does have to do with the economy. We’re sort of in hard times.

Economists attribute the rise in debt partly to high inflation, which has strained household budgets. Professor Emerita of Economics Lucia Dunn noted that essential expenses like food, school supplies, and baby necessities are forcing many to carry credit card balances. She emphasized that carrying debt during economic downturns can be particularly detrimental, citing the 2008 financial crisis as a cautionary example.

“

Having debt when there’s a downturn is very serious for people, and it can do a lot of harm.