Americans have $1T in credit card debt

US credit card debt soared to record levels towards the end of 2023, according to the New York Fed. Credit card balances reached a new nominal high of $1.13 trillion in the October-through-December period, the third consecutive quarter that dues were above a trillion dollars.

The average unpaid credit card balance of an American in the fourth quarter of last year stood at $6,864 in the last quarter of 2023, per an analysis by LendingTree.

The fourth quarter also saw the overall US household debt, including unpaid credit card balances, rise to $17.5 trillion.

Not a problem
The NY Reserve Bank noted that though the credit card debt is high, after adjusting for inflation, it is actually lower than its peak in 2008.

It also noted that about 55% of borrowers pay off their balances monthly.

Economists point out that credit card debt is not a big deal. According to them, several factors indicate economic stability, including robust wage gains, a steady stock market, improved economic sentiment and healthy holiday spending by consumers.

They also say credit card debt increases as the economy grows.

The job market remains strong, with 353,000 jobs added in January and a steady unemployment rate of 3.7% (higher than pre-pandemic levels).

Challenges persist
Inflation is still above the Federal Reserve’s 2% target, with interest rates at their highest in 23 years—affecting borrowing costs for various loans.

Housing affordability also remains a widespread concern. Now is the most expensive time since 2006 to buy a home. Inflation, coupled with 7% mortgage rates and a shortage in inventory, makes buying a house an unachievable dream for several Americans.