US credit card debt reaches $1.13 trillion as prices remain high

Total credit card debt hit yet another all-time high in the fourth quarter of 2023, according to the Federal Reserve Bank of New York's latest Household Debt and Credit Report.

The balance increased to $1.13 trillion, an increase of $50 billion in 90 days. It's common for credit card debt to spike in the fourth quarter as consumers spend more during the holiday season. Such moves are typically followed by a first-quarter gain, but last year overall balances remained flat quarter-over-quarter for the first time in nearly 20 years.

Related: Max Out: Inside America's Credit Card Debt Crisis — And What We'll Do Next

In addition to record balances, average credit card APRs reached a new high of 21.47% in November, according to the latest data available from the Federal Reserve. Rising debt balances and increasing annual interest rates create a one-two punch, further exacerbating the credit card debt crisis.

Credit card delinquency rates, defined as those who are more than a month behind on their minimum required payments, also increased, reaching an annual rate of 8.5%.

Many people are borrowing more money to make ends meet, and it's not just credit card debt that's on the rise. During the same 90-day period, home equity lines of credit (HELOCs) increased by $11 billion, and auto loan balances increased by $12 billion, according to the FRBNY report. Some companies are leaning toward short-term loans in the form of buy now, pay later. According to Adobe Analytics, his BNPL usage on Cyber ​​Monday 2023 increased by 42.5% compared to the previous year.

Federal student loan repayments may be contributing to the woes of credit card users. An estimated 44 million borrowers resumed payments in October, adding one more monthly debt payment. Borrowers have been given a grace period until September 30, 2024 to start repaying their loans without affecting their credit scores, so the full impact of resuming payments won't be known until next fall.

If you're struggling with credit card debt, get back to basics by creating a clear budget and repayment plan. Consider getting a balance transfer credit card with a longer balance transfer period. This allows you to waive interest payments for a certain period of time and reduce your debt. If you feel like you can't pay your debts, consider debt consolidation loans or debt consolidation options.

To prevent future debt, consider treating your credit card like a debit card and avoid overspending. If you tend to carry a balance, resist the temptation to get another credit card just for the sign-up bonus. This is because the interest accrued quickly negates benefits and perks.

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