Americans are about to have a much harder time paying their bills

• Americans held over $1 trillion in credit card debt in the second quarter of 2023, a new record.
• That's according to the latest report from the Federal Reserve Bank of New York.

Americans are dealing with record-high bills — and it might be a cruel fall as more payments come due.

According to the latest data report from the Federal Reserve Bank of New York, Americans held a record $1.03 trillion in credit card debt in the second quarter of 2023. That's an increase of $45 billion from the last quarter and marks another quarter of rising balances after an initial plunge early on in the pandemic.

The rise in credit card debt helped push total household debt to a record-high $17.06 trillion.

All told, Americans are in a lot of everyday debt, and there's no immediate relief in sight. An increasing number are letting balances languish for months without payment — and that's all before student loan payments restart in the fall. It's a worryingly cloudy picture for everyday consumers, who are still feeling hammered by slowly cooling inflation.

The second quarter saw auto debt grow by $20 billion to $1.58 trillion, and mortgage balances held strong at around $12 trillion. Student loan balances ticked down to $1.57 trillion, likely due to the continued payment pause. However, that also means those debts aren't impacting consumers' every day finances.

Bankrate also found that 60% of those with a credit card balance — 54 million people in total — have been indebted for at least a year. Per the New York Fed report, 8% of credit card debt balances were delinquent for 90 days or more, meaning that they had gone unpaid for months. The percentage of credit card debt flowing into serious delinquency rose from 3.35% in the second quarter of 2022 to 5.08% in the second quarter of 2023.

"Credit card balances saw brisk growth in the second quarter," Joelle Scally, Regional Economic Principal within the Household and Public Policy Research Division at the New York Fed, said in a press release. "And while delinquency rates have edged up, they appear to have normalized to pre-pandemic levels."

Courtney Alev, consumer financial advocate at Credit Karma, told Insider that since the Fed started raising interest rates a while ago, the personal finance site has seen credit scores fall by an average of 13 points.

"We're actually seeing reflected in the data that people are carrying more debt, their utilization's going up, and it is seeing an impact on their credit," Alev said.

And, with rising interest rates, "that debt has not been this expensive in over two decades," Alev added.

For the last seven quarters, credit card balances have grown year over year amid strong consumer spending despite high prices. However, the average credit card rate remains at an all-time high of over 20%.

This data comes just months before student-loan payments are set to resume after an over three-year pause. While both former President Donald Trump and President Joe Biden extended the pause on federal payments and interest accrual numerous times to give borrowers financial relief during the pandemic, the bill to raise the debt ceiling that Biden signed into law in early June codified the end of that pause.

That means that Biden cannot extend the pause again this year in connection with COVID-19 — and interest will begin accruing again on borrowers' balances in September, with their first bill coming due in October. While the New York Fed's report showed little change to the student-loan portfolio due to the ongoing pause, the other forms of consumer debt student-loan borrowers hold will likely complicate the return to repayment.

For example, a recent report from the Consumer Financial Protection Bureau found that median payments on other debt obligations increased by 24% for borrowers likely returning to repayment, and more than one-in-thirteen borrowers are currently behind on other payment obligations. Still, the Education Department announced a 12-month "on-ramp" for borrowers once payments resume during which missed payments will not be reported to credit agencies.

Despite these record-high credit card balances, there are some silver linings.

Even though credit card debt hit its record high $1 trillion in the second quarter, Americans had over $14 trillion in their checkings and savings accounts as of the first quarter, suggesting that they have ample liquid financial assets ready to stay on top of their bills. Additionally, debt service payments as a percentage of disposable income are also near historic lows.

"Just over half of cardholders avoid interest by paying in full each month, so credit cards are working for them, in terms of rewards and buyer protections," Ted Rossman, senior industry analyst at Bankrate, said in a note after the New York Fed announcement.

As Rossman pointed out, "consumer spending powers about 70% of economic growth," so while many Americans are going into more debt racking up credit card bills, the broader economy is benefiting. With credit flowing rather freely, this debt peak may not have a disastrous impact on the economy.

A generally good economy could also help Americans handle their debt burdens. "Overall, the strong job market has most consumers in a pretty good position, despite high inflation and high interest rates," Rossman said.

Wages still grew in July, for instance. Inflation has been slowing, with new data out later this week. But while those are all good signs for the broader economy, it might not mean much for Americans sitting on piles of debt.

Are you dealing with an untenable amount of credit card debt, or worried about student loan payments restarting? Contact these reporters at jkaplan@insider.com, mhoff@insider.com, nsheidlower@insider.com, and asheffey@insider.com.