Credit card debt was another significant contributor to the overall debt load, increasing 15% annually, the largest upswing in more than 20 years. Credit card balances were also shown to have increased more for borrowers aged 30 to 59 and those in lower-income areas. Comparatively, borrowers aged 60 and 79, along with those in higher-income areas, had balances that were below pre-pandemic levels.
Considering the impact of inflation, Fed researchers said it isn’t surprising to see household balances rise.
“The real test, of course, will be to follow whether these borrowers will be able to continue to make payments on their credit cards,” they said.
The researchers added that delinquency rates had remained “low by historical standards,” suggesting that consumers have generally been able to manage their finances amid growing economic pressures.
According to the Fed’s report, auto loan balances increased by $22 billion in the third quarter to over $1.5 trillion, continuing an upward trajectory that has been ongoing for the last 10 years. Meanwhile, student loan balances contracted slightly to $1.6 trillion, down $15 billion from the previous quarter.