debt

Americans Drowning in Record Household Debt Amid Financial Strain

EDITOR'S NOTES

Americans are facing a dire financial situation, with household debt soaring to an all-time high of $17.69 trillion in the first quarter of 2024. The latest New York Federal Reserve report reveals that rising mortgage balances and auto loans are driving this surge, while a growing number of households are falling behind on payments. With credit card delinquencies hitting their highest level since 2012 and interest rates near record highs, the financial distress is palpable. The struggle to keep up with sky-high prices is pushing many families deeper into debt, painting a bleak picture of America’s economic health.

Americans racked up more debt at the beginning of 2024 – and a growing number of households fell behind on payments for several types of loans, according to a New York Federal Reserve report published Tuesday.

In the first three months of 2024, total household debt surged to a fresh record of $17.69 trillion, an increase of $184 billion, or 1.1% from the previous quarter. The increase mostly stemmed from a jump in mortgage balances, which rose $190 billion from the previous quarter to $12.44 trillion at the end of March. 

Auto loan balances rose slightly by $9 billion, continuing the upward climb seen since 2020, and now stand at $1.62 trillion. But credit card balances fell by $14 billion to $1.12 trillion – near a record high – as consumers worked to pay down their debt following the holiday shopping season. 

Multiple credit cards lying on table
A new Biden administration rule has created an $8 ceiling for credit card late fees. (Photo by Matt Cardy/Getty Images / Getty Images)
 

The report also showed a notable increase in the number of borrowers who are struggling with credit card, student and auto loan payments. 

As of March, about 3.2% of outstanding debt was in some stage of delinquency, up from the 3.1% recorded the previous quarter but still down from the average 4.7% rate seen before the COVID-19 pandemic began. The transitions into delinquency, particularly serious delinquency in which a balance is more than 90 days overdue, rose across all debt types.

"In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups," said Joelle Scally, regional economic principal within the Household and Public Policy Research Division at the New York Fed. "An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households."

Credit card delinquencies continued to rise from their pre-pandemic levels in the first quarter. In fact, the percentage of credit card balances in serious delinquency climbed to its highest level since 2012.

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