Household debt hits $17.69 trillion; slight dip in credit card balances

May 15, 2024 11:52 am
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PHOENIX (AZFamily) — Consumer household debt hit $17.69 trillion in the first quarter of 2024, according to a new report by the Federal Reserve Bank of New York. It’s an increase of $184 billion in the first three months of the year.

Mortgage debt went up $190 billion, and auto debt jumped $9 billion, while student loan debt fell $6 billion. Credit card debt also dropped $14 billion, but consumers still owe $1.12 trillion on credit cards alone. That’s a 13% increase from the same time last year.

“There’s this interesting phenomenon where post-holidays, people often go on a bit of a spending detox and they use their tax refund money to pay off credit card debt,” said Bankrate’s Ted Rossman. “We did eke out a slight decrease, but not as much of a decrease as we usually see. That could maybe foreshadow a little bit of trouble for later in the year just because balances usually do rise in the second and third quarters, then they really jump in the fourth quarter around the holidays.”

The latest inflation data from the U.S. Department of Labor shows inflation cooled slightly in April to 3.4%, but inflation remains a major factor in financial challenges for consumers.

“Gen Z’ers have more credit card debt and more credit card delinquencies than millennials did at the same age, which is potentially worrisome and is wrapped up in all these higher costs for everything,” Rossman said. “At the end of the day though, it does bring me back to that fork in the road between 56% of card holders who pay in full, and life is great, and they get rewards and convenience and buyer protections, and the other 44% have a very expensive debt cycle.”

If you’re part of that 44% of people who carry a credit card balance, there are solutions to pay it off. Evaluate monthly income and expenses and set a budget. Then cut costs to free up more money to apply to credit card balances.

Rossman also said, if you qualify, a 0% balance transfer credit card may help you pay off debt faster. There will likely be a 3-5% fee up front but could save you in interest if you pay off the debt in full by the end of the promotional period.

“I still think it’s well worth it, provided you can make progress,” Rossman said. “That’s the thing. You don’t want to just kick the can down the road.”

The New York Fed’s report also highlights an increase in serious delinquencies of 90 days or more past due on mortgages, car loans and credit cards.

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