INDIANAPOLIS — A recent report paints a bleak picture when it comes to Americans’ household debt.
Delinquency rates for credit cards and auto loans are at their highest levels in more than a decade, according to the quarterly report from the Federal Reserve Bank of New York.
The report shows American credit card debt has now reached $1.14 trillion, which is up 48% from $770 billion in 2021. Household debt, which also includes mortgages and auto loans, is up to $17.8 trillion, an increase of 26% from $14.64 trillion in 2021.
The increase comes in the wake of inflation hitting all-time high of just over 9% in 2022. It prompted the Federal Reserve to start a campaign to slow it down, which included raising interest rates. Inflation has since dropped back down to 2.9%, however, Americans are still paying higher prices than three years ago and fewer people are keeping up with their credit card and loan payments.
In the last 12 months, 9.1% of credit card balances have fallen into delinquency, according to the Federal Reserve Bank report. Of those, 8% of auto loans have been delinquent–the highest numbers since 2011 and the end of 2010.
Going forward, many economists are predicting the Federal Reserve will start cutting interest rates at its next meeting in September. Lower interest rates could help slow the climbing balances among credit card and loan borrowers.
In the meantime, the Federal Trade Commission has an entire website dedicating to getting yourself out of debt. It has a large number of helpful tips and guides to follow in order to ease your debt burden.
