Americans continue to pile up credit card debt, edging close to $1 trillion

Americans continue to bury themselves in credit card debt this year, with the latest total balance inching close to $1 trillion.

U.S. consumers now owe $986 billion on their charge cards, according to Federal Reserve Bank of New York data released Monday. That's a 17% jump from a year ago and a record high, analysts at Bankrate said. The debt keeps piling up partly because stubbornly high inflation is forcing households to lean on their credit cards to cover monthly expenses, financial experts said. 

"High inflation is certainly contributing to Americans' high credit card balances, along with record high interest rates," Ted Rossman, senior industry analyst at Bankrate said. "More than a third of U.S. adults have more credit card debt than emergency savings, the highest since we started tracking this in 2011."

Total credit card debt reached the same mark during the final months of 2022, and the balance remained unchanged in the first quarter of 2023, the Fed data shows. That's noteworthy because households typically rack up debt to pay for holiday festivities, then pay off balances by spring. 

Rossman said 2023 marks "the only time since the New York Fed started tracking these figures in 2003 that credit card balances did not fall from Q4 to Q1."

• As APRs reach record highs, what's a good credit card interest rate?
• What you should know about "buy now, pay later" plans
• Credit card debt is getting pricier. Here's how to pay if off.

Record APRs

Credit card interest rates are also playing a role in the higher total debt, reaching their own record highs this year, Rossman said. The average credit card APR recently soared to 20.92%, higher than at any point since the Federal Reserve began tracking annual percentage rates in 1994, according to a study from WalletHub. 

Although inflation is cooling, the price of housing, transportation and some food items remains elevated compared to years prior. Credit cards have become the go-to option for consumers as wage growth hasn't kept pace with inflation.

Between interest rates and inflation, "It's likely just a matter of time before credit card balances surpass $1 trillion for the first time since the New York Fed began tracking," Matt Schulz, chief credit analyst at LendingTree, said in a research note. 

Credit cards aren't the only debt that have ballooned. Americans owe a total $1.5 trillion in auto loans, $1.6 trillion in student debt and $12 trillion in home loans, according to the Fed data. Counting all household debts, Americans owe a record $17 trillion, the data shows.