Credit Card Debt Surpasses Pre-Pandemic Highs As Americans Wade Through Decades High Inflation

Credit card balances increased $61 billion in the fourth quarter to $986 billion, surpassing the pre-pandemic high of $927 billion, according to a report released by the Federal Reserve Bank of New York’s Center for Microeconomic Data.

The rise in credit card debt comes at a time when Americans have been wading through decades high inflation, which saw the central bank embark on a series of rate hikes.

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At the same time, there has been a rise in total household debt in the fourth quarter of 2022, increasing by $394 billion, or 2.4%, to $16.90 trillion.

Wilbert van der Klaauw, economic research advisor at the New York Fed, pointed out that credit card balances grew robustly in the fourth quarter, while mortgage and auto loan balances grew at a more moderate pace, reflecting activity consistent with pre-pandemic levels.

"Although historically low unemployment has kept consumer’s financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts," he said.

According to the report, mortgage balances rose by $254 billion in the fourth quarter of 2022 and stood at $11.92 trillion at the end of December, marking a nearly $1 trillion increase in mortgage balances in 2022.

Auto loan balances rose by $28 billion during the period, consistent with the upward trajectory seen since 2011. Student loan balances stood at $1.60 trillion, up by $21 billion from the previous quarter, the report said.

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