(Bloomberg) – U.S. household debt grew at its fastest annual rate since 2008 in the third quarter, with credit card balances rising even as interest rates charged by lenders to consumers hit highs. most in decades.
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Households added $351 billion in overall debt last quarter, bringing the total to $16.5 trillion, according to data released by the Federal Reserve Bank of New York on Tuesday. That was an 8.3% increase from a year earlier, the highest since the 9.1% increase in the first quarter of 2008. Debt figures are not adjusted for inflation.
Most of the most recent increase has been in mortgage debt, by far the largest debt on a household’s balance sheet. It grew $282 billion in the third quarter, and $1 trillion from a year earlier, to $11.7 trillion. Mortgage and home equity debt combined have increased by $2 trillion since the pandemic began.
Credit card debt also increased the most in 20 years, with balances up 15% from a year earlier. The increase comes as average card interest rates have risen above 19%, the highest in data since the mid-1980s, according to Bankrate.
With prices up more than 8% from a year earlier at the end of the quarter, it is “not surprising” that balances are growing, Fed researchers wrote in a blog post. “Of course, the real test will be to see if these borrowers can continue to pay with their credit cards.”
The crime rate is currently low by historical standards, as many households have seen their finances buoyed by pandemic stimulus and lockdown savings.
The Fed researchers wrote that there are still signs of “different effects of inflation” in the debt data.
Credit card balances increased more for borrowers between the ages of 30 and 59 and those in lower-income areas. These groups now owe more than they did in December 2019. In contrast, older borrowers between the ages of 60 and 79, and those in higher-income areas, still have balances. below pre-pandemic levels, the researchers found.
According to the New York Fed, there are 191 million Americans with at least one credit card. Many accounts have more than one: The total number of accounts is estimated at 555 million, an increase of about 100 million compared to 2016.
In addition to increasing credit card debt, Americans are also tapping into their home equity to help meet their spending needs. For the second quarter in a row, home credit lines increased.
Auto loan balances grew by $22 billion in the third quarter and are now above $1.5 trillion, nearly double what they were a decade ago.
With student loan payments and interest rates frozen during the pandemic, auto debt is on track to overtake as the second-largest debt for U.S. households after loans. mortgage their home.
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