Credit card debt hits record high as Americans struggle with cost-of-living

Federal Reserve Bank of New York ; Note: Not adjusted for inflation; Chart: Axios Visuals Americans' credit card balances hit a record $1.29 trillion in the third quarter, according to a new report released by the Federal Reserve Bank of New York. Why it matters: Falling behind on credit card payments can trap struggling households in a cycle of fees, damaged credit and increasingly expensive borrowing. The latest figures show that financial pain is concentrated in lower-income communities, even as delinquency rates improve nationally. By the numbers: Consumer credit card balances rose by $22 billion in the third quarter, an increase of 1.7%. That's $52 billion higher than a year earlier. The figures aren't adjusted for inflation, meaning some of the increase reflects higher prices rather than greater borrowing in real terms. Total household debt, including mortgages and student and auto loans, rose $334 billion, reaching a record $19.1 trillion in the third quarter. The total is up $5 trillion since 2019, just before the pandemic. Yes, but: Fewer credit card balances are becoming seriously delinquent, a sign of some improvement in Americans' ability to keep up with payments. The rate at which credit card debt becomes seriously overdue edged down to 6.9% in the third quarter, though it remains notably above the 5.2% recorded before the pandemic. Between the lines: A separate report from the New York Fed on Tuesday showed Americans in lower-income neighborhoods are having a harder time keeping up with credit card payments relative to their wealthier counterparts. Delinquency rates remain above pre-pandemic levels across all neighborhood-income groups, with the gap between the richest and poorest areas increasing since 2022. In the lowest-income neighborhoods, 10.3% of credit card balances became seriously delinquent over the past year — more than double the 4.4% rate in the wealthiest neighborhoods. The big picture: Average credit card balance per borrower is now $6,