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Americans are racking up credit card debt again – as mortgage forbearance ends and prices continue to rise


During most of the pandemic, Americans did something unusual during a recession: They started paying off their credit debts. But now Americans are starting to take on more credit card debt again as the economy continues to recover.

In the third quarter of 2021, Americans racked up $ 17 billion in credit card debt, the same increase as in the second quarter, according to data released Tuesday in the New York Federal Reserve’s quarterly report on debt and debt. household credit.

The increase stems from the phasing out of stimulus programs such as increased unemployment benefits and economic relief checks, as well as more opportunities to spend money compared to previous points in the pandemic, New York Fed researchers said.

“As pandemic restrictions are lifted and consumption normalizes, credit card use and balances are returning to their pre-pandemic trends, albeit at lower levels,” said Donghoon Lee, chief executive officer. research at the New York Fed.

Given inflation, the rise in credit card debt in the last quarter is far from normal. Before the pandemic, average third-quarter credit debt rose nearly 7%, after adjusting for inflation. But real credit card debt in the last quarter rose 0.5%

But there is room for people to take out their credit cards again. Credit card balances “are $ 123 billion lower than they were at the end of 2019,” the New York Fed report said.

In total, household debt rose by $ 286 billion in the third quarter to $ 15.24 trillion, an increase of almost 2% from the second quarter of this year.

The biggest contributor to the overall increase in household debt in the last quarter was mortgage balances, which increased by $ 230 billion.

This is in part due to record house prices that are forcing borrowers to take on bigger mortgages and end forbearance programs, New York Fed researchers said on a call with reporters.

As a result, more Americans could “rely” on credit cards to pay off their other obligations as more of their income is spent on mortgage payments, the researchers added.

There was a further increase in the cost of living in September, which kept the inflation rate in the United States at a 30-year high, adding to growing evidence that prices are expected to stay high through the year. next, said the Bureau of Labor Statistics. month.