Credit card balances increased in the second quarter, surpassing $1 trillion for the first time.

Americans increasingly used credit cards to make ends meet as summer approached, sending aggregate balances above $1 trillion for the first time ever, according to the New York Federal Reserve.

Total credit card debt increased by $45 billion from April to June, a more than 4% rise. The total sum outstanding now stands at $1.03 trillion, the largest gross figure in Fed statistics dating back to 2003.

The increase in this category was the most striking, as total household debt increased by roughly $16 billion to $17.06 trillion, a new high.

“Over the last three years, household budgets have benefited from excess savings and pandemic-related debt forbearances, but the remnants of those benefits are fading,” said Elizabeth Renter, statistics analyst at personal finance website NerdWallet. “Credit card delinquencies continue to rise, indicating that consumers are feeling the pinch of rising prices and lower savings balances than just a few years ago.”

The delinquency rate increased as card use increased.

The Fed’s gauge of credit card debt 30 or more days late rose to 7.2% in the second quarter, up from 6.5% in the first quarter, and the highest rate since the first quarter of 2012, albeit still near to the long-run average, according to central bank officials. Total debt delinquency increased to 3.18% from 3%.

“Credit card balances saw brisk growth in the second quarter,” said Joelle Scally, regional economic director at the New York Fed’s Household and Public Policy Research Division. “And, while delinquency rates have increased slightly, they appear to have returned to pre-pandemic levels.”

According to Fed experts, the increase in balances implies both inflationary pressures and increased levels of spending.

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According to SMB Nikko Securities, family income adjusted for inflation and taxes is 9.1% lower than it was in April 2020, placing extra pressure on consumers.

“This is an issue because the sustainability of consumers’ pandemic debt-binge was partly predicated on their incomes steadily rising,” said Troy Ludtka, senior U.S. economist at SMBC Nikko, in a client note. “Instead, the opposite happened, and the rate at which borrowers are falling behind on their debt payments has returned to pre-Covid levels.” This might be the next obstacle for struggling commercial banks.”

The central bank also stated that demand for card issues has decreased, which coincides with bank statements that lending criteria are tighter.

Debt in other categories changed barely little. Mortgage originations increased to $393 billion, but overall mortgage debt decreased to a little over $12 trillion. Auto loans grew by $20 billion to $1.58 trillion, while student loans declined to $1.57 trillion ahead of the end of the payment moratorium.

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