US credit card debt hits record $1.3 trillion as household balances climb

American households owed $1.29 trillion on their credit cards at the end of September, a record, according to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit, released Tuesday. Card balances rose $22 billion in the third quarter, and total household debt climbed $334 billion, or 1.8%, to $19.1 trillion, the New York Fed's Center for Microeconomic Data said. The report is based on the bank's Consumer Credit Panel, drawn from anonymized Equifax credit data.

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Mortgages drove most of the increase. Mortgage balances rose $257 billion to $13.4 trillion, while home equity lines of credit climbed $23 billion to $481 billion, the largest quarterly gain since 2005. Auto loans rose $21 billion to $1.73 trillion, student loans edged up $5 billion to $1.66 trillion, and credit card limits expanded $115 billion as lenders kept extending more capacity to cardholders. "Household debt levels rose moderately, led by increases in mortgage and home equity line of credit originations," Donghoon Lee, an Economic Research Advisor at the New York Fed, said in the release. "Although delinquency transition rates for housing debts have crept up, the overall credit quality of these loans remains strong." Aggregate delinquencies did worsen, with 5.0% of outstanding debt in some stage of delinquency, up 0.3 percentage points from the second quarter. Transitions into serious delinquency improved slightly for credit cards and student loans but ticked up for auto loans and mortgages. The record card balance is not who the burden falls on. In a companion Liberty Street Economics post, New York Fed researchers separated credit card delinquency by zip-code income. The rise in newly delinquent card balances since 2022 has been steepest among borrowers in lower-income neighborhoods, whose pandemic-era savings have largely been spent and whose fiscal and monetary support has ended. The median credit score at card issuance fell from 699 in the 2017 to 2019 period to 688 during 2020 to 2022, evidence of looser pandemic-era lending, and it is those vintages that have driven the delinquency increase. There is a bear case and a bull case in this release. The worrying case: a record card balance against hot inflation pressures and still-elevated rates strains lower- and middle-income budgets first, and when serious delinquencies climb, consumer lenders raise card-loss provisions, which compresses their margins and tightens credit just as the household needs it. That is the K-shaped tension that can cap consumer spending, roughly two thirds of the economy, and it is one reason rate-cut expectations stay fragile. The more encouraging read is that the stress looks like a pandemic-era echo, not a permanent shift. The researchers found delinquency on cards issued during 2020 to 2022 is now abating, and the elevated rates of the past few years may continue to fade as those vintages shrink. New issuance in 2025 was lower credit quality than 2024 but above pre-pandemic norms, a crosscheck of how fresh capacity is priced. Measured this way, the percentage of balances newly entering serious delinquency for credit cards improved this quarter. For the Federal Reserve, the data cut against near-term rate relief. The central bank meets again in December, and the path between now and that decision is shaped by whether inflation cooling continues while households carry record card debt into the holiday spending season. The next Household Debt and Credit release early next year will show whether the fourth quarter kept the climb going and whether the income gap in delinquencies widened or narrowed. Both the household balance sheet and the bank card-loss line are watched items until then.

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