The Federal Reserve Bank of New York said Tuesday that United States credit card debt levels have surpassed $1 trillion for the first time ever.
Despite a strong labor market, a growing economy and increased consumer spending, credit card debt is being driven by persistently high inflation along with the highest key interest rates in two decades.
Overall, household debt levels are up 1% to a total of $17.06 trillion for the quarter due to credit card debt, auto loan balances and mortgage payments; some 14 million U.S. homeowners refinanced their homes during the pandemic.
Further, Bank of America reported Tuesday that more Americans are dipping into their 401(k) accounts to help ease their financial burdens. The number of people who made a hardship withdrawal from their 401(k)s increased by 36% between the second quarters of 2022 and 2023.
The latest statistics don’t include student loan debt, which is set to resume in October following a pause in payments due to the pandemic. The Biden Administration has undertaken efforts to forgive tens of billions of dollars in student debt, but it’s been met by legal challenges, and the U.S. Supreme Court struck down the White House’s initial plan to forgive outstanding student debt.