Americans’ collective credit card balances totaled $986 billion at the end of last year, up $61 billion from the previous quarter, according to the Federal Reserve Bank of New York’s quarterly household debt report. Overall, U.S. household debt—including mortgage, auto, student loan, and credit card debt—grew to $16.90 trillion at the end of 2022. 

That $61 billion increase in credit card debt, however, was the largest quarterly jump recorded in the history of the N.Y. Fed’s data, which dates back to 1999. Additionally, the total accumulated credit card debt surpassed the pre-pandemic record of $927 billion. 

“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,” Wilbert van der Klaauw, economic research advisor at the New York Fed, said in a statement. 

While the high debt level is a bit alarming itself, more troubling is that delinquency rates are also ticking up. Researchers say that while the amount of debt transitioning into serious delinquency (more than 90 days past due) still appears relatively small, the trend is starting to pick up pace.  

“Although historically low unemployment has kept consumers' financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers' ability to repay their debts,” van der Klaauw said. 

The percentage of credit card balances that shifted into series delinquency in Q4 of 2021 was about 3.2%. That increased to about 4.01% at the end of 2022, the N.Y. Fed found. Overall, there were 18.3 million borrowers behind on their credit card payments in 2022 compared to 15.8 in 2019. 

Younger Americans are more likely to struggle with credit card debt 

When looking at the number of borrowers who are becoming delinquent, N.Y. Fed researchers found that younger Americans are struggling the most. Those in their 20s and 30s are missing credit card payments and transitioning into serious delinquency at higher rates than they were pre-pandemic. 

As van der Klaauw noted, the struggle among younger Americans to keep afloat—and out of serious debt—is likely due to a combination of inflation and higher interest rates cutting into monthly budgets. Generally speaking, pay raises haven't kept up with inflation, meaning real disposable income for Americans actually fell in 2022. That means that many Americans may be putting the increased cost of gas and groceries on their credit cards only to face higher payments thanks to spiking interest rates, N.Y. Fed researchers noted. 

That said, even as credit card delinquency rates tick up, the trend hasn’t yet hit a “worrisome” level by itself, in part, because the U.S. is coming off a period of historic lows prior to the pandemic, according to researchers. But it could be a red flag, particularly when considering that younger borrowers are more likely to have student loan debt that is currently under a payment pause. 

Once payments resume, those who are already struggling to pay their monthly credit card bills may fall further behind when they need to also juggle loan repayments. 

The threat of a recession is also a concern. Typically, a downturn spurs in a jump in unemployment rates. Right now, delinquency rates are rising in spite of a pretty strong labor market, the researchers note. So if the unemployment rate goes up sharply, delinquencies are also likely to rise. But if the unemployment rate stays at these very low historical levels, will delinquencies still continue to rise?

For now, researchers are watching closely.