Following the trend of the last several months, Americans’ household debt has increased once again to new record highs, according to the Federal Reserve Bank of New York.
The findings were shared in the bank’s report from Thursday, noting that household debt among Americans, which includes mortgages, auto loans, student loans, and credit cards, has risen to $18.04 trillion.
Overall, in the last three months of 2024, the nation’s household debt grew by $93 billion, with almost half of the increase being attributed to new credit card debt, the report shared.
The report highlights that, in total, Americans’ credit card balances now stand at a record $1.21 trillion.
Researchers for the bank shared during a call on Thursday that credit card debt tends to go up at the end of the year thanks to holiday shopping. Still, delinquencies, or missed payments on credit card bills, also increased throughout the fourth quarter.
However, they expect balances will start to drop at the start of this year as shoppers pay down their debt.
Researchers noted that another factor in rising credit card debt is high interest.
Members of Congress have been looking to address high interest rates through legislation that would cap credit cards at 10%, instead of the current average rate which is north of 28%.
Sen. Josh Hawley (R-MO) and Bernie Sanders (I-VT) introduce the bill, with both men noting that Americans are being taken advantage of through higher rates.
“Credit card interest rates are out of control. Rates have DOUBLED in recent years. In 2022 alone, credit cards charged Americans $105 billion in interest,” Hawley wrote on X. “Today @BernieSanders and I are teaming up to introduce a 10% cap on interest rates – just like @realDonaldTrump proposed.”
Sanders said that current interest rates are not good for consumers and make credit less available for Americans.
“When large financial institutions charge over 25 percent interest on credit cards, they are not engaged in the business of making credit available. They are engaged in extortion and loan sharking,” Sanders said in a statement.
Still, even with rising debt, income levels have also been going up, which they say is a positive sign for the health of the economy.
But it’s not just credit card debt that Americans are struggling with, as the report noted that delinquency rates for auto loans also increased, with Americans currently holding $1.7 trillion in auto loan debt.
The increase in auto loan debt was attributed to the higher prices for new and used cars that were sparked by the pandemic.
“While mortgage delinquency rates are similar to pre-pandemic levels, auto loan delinquency transition rates remain elevated,” Wilbert van der Klaauw, an economic research adviser at the New York Federal Reserve, shared on the call. “High auto loan delinquency rates are broad-based across credit scores and income levels.”