US credit card debt just crossed a very worrying threshold for the first time

The U.S. is the world’s largest economy, thanks in part to a consumer economy that is fueled by debt. 

But now, that household debt is taking on unprecedented levels that could sink the consumer economy, according to new data from the Federal Reserve Bank of New York.

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U.S. credit card debt rose by $45 billion to $1.03 trillion in the second quarter from the first quarter, a 4.6% quarterly increase. It’s the first time in U.S. history that household credit card balances topped the $1 trillion mark as the number of credit card accounts expanded by 5.48 million to 578.35 million in the quarter.

There was a bit of good news in the Federal Reserve Bank of New York’s quarterly household and credit debt report; overall delinquency rates were roughly flat quarter to quarter and have remained low.

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However, the share of debt newly transitioning into delinquency increased for credit cards and auto loans.

“Compared to other debt categories this quarter, credit card balances saw the most pronounced worsening in performance, following a period of extraordinarily low delinquency rates during the pandemic,” the New York Fed said. 

But the rebalancing is only bringing credit card delinquency rates to the same place they were before the pandemic. 

Other forms of debt also had a resurgence in the second quarter. 

Auto loan balances rose by $20 billion with the volume of newly originated auto loans climbing to $179 billion. 

Housing was also hot in the quarter with $393 billion in newly originated mortgage debt. Meanwhile, about 39,000 Americans had new foreclosure notations on their credit reports, a slight increase from the previous quarter. 

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