New Credit Pushes American Household Debt Beyond $15T

Household debt in the U.S. has now topped $15 trillion, with credit card balances up $17 billion to reach $800 billion in the third quarter, the second consecutive expansion following a year of declines, according to a report from the Federal Reserve Bank of New York’s Center for Microeconomic Data.

The total debt balance is $1.1 trillion higher than at the end of 2019 and $890 billion higher than in the third quarter of last year. The peak of $12.68 trillion was in 2008. The total number is $123 billion lower than at the end of 2019, however, the past two quarters are closer to normal.

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“We are again seeing credit card balances increase in the third quarter after a solid rise in the previous,” said Donghoon Lee, research officer at the New York Fed.

“As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances. At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends, although from lower levels,” Lee said.

Read more: NY Fed: Household Debt Nears $15T Amid Rise In Mortgage, Auto Loan Originations

Mortgages rose by $230 billion and to $10.67 trillion at the end of September, while auto loan balances increased by $28 billion in the third quarter. Student loan balances increased by $14 billion. Mortgage originations, including refinancing, hit $1.1 trillion, dropping a bit from the series high of $1.2 trillion reached in the second quarter of 2021.

The volume of newly originated auto loans, including leases, was $199 billion, down from the second quarter’s series high of $202 billion. Aggregate limits on credit card accounts hit $3.96 trillion, going up to $88 billion in the third quarter and reversing the decline seen in the first three-quarters of the pandemic recession, according to the report.

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Delinquency rates across all debt products are continuing to decline, which is credited largely to monetary support from the CARES Act, as well as from lender concessions. Mortgage delinquencies, however, went up by 0.41 percent from the second quarter.