Americans notched the biggest annual increase in credit card debt on record last quarter

• New York Fed economists said Tuesday US credit card balances grew $48 billion in the third quarter.
• An an annual basis, balances jumped by $154 billion, the highest increase on record.

Economists at the New York Federal Reserve said Tuesday Americans' credit card balances grew by $48 billion in the third quarter, or about 4.7%, with the total amount reaching $1.08 trillion.

The quarterly gain marked the eighth consecutive three-month stretch of annual increases. At $154 billion, the nominal year-over-year increase in the quarter was the largest reading since data began in 1999, the economists said.

Total household debt grew $228 billion over the three month stretch, with credit cards and student loans accounting for a significant portion. Credit card debt hit $1 trillion for the first time ever this past summer.

"The increase in balances is consistent with strong nominal spending and real GDP growth over the same time frame," Fed researchers wrote in an accompanying blog post published with the data. "But credit card delinquencies continue to rise from their historical lows seen during the pandemic and have now surpassed pre-pandemic levels."

Aggregate delinquency rates jumped in the third quarter, according to the Fed economists.

As of September, 3% of outstanding debt had reached some stage of delinquency, an increase of 0.4 percentage points from the prior quarter, though down 1.7 percentage points from the fourth quarter in 2019, the stretch before the pandemic.

Close to 9.5% of credit card balances were more than 90 days delinquent last quarter, up from 8% in the second quarter and 7.6% during the third quarter of last year.

The New York Fed economists also reported that consumers with higher total balances are more likely to transition to delinquency, and that those with balances over $20,000 have the highest transition rate since the start of last year.

Borrowers with balances below $5,000, meanwhile, which were about 68% of all borrowers last quarter, are hovering near delinquency transition rates similar to pre-pandemic levels.

"Delinquency rates on most credit product types have been rising from historic lows since the middle of 2021," researchers wrote. "The transition rate into delinquency remains below the pre-pandemic level for mortgages, which comprise the largest share of household debt, but auto loan and credit card delinquencies have surpassed pre-pandemic levels and continue to rise."