US credit card debt hit a record high as inflation leaves consumers financially stressed

Americans are relying on credit cards more than ever. But as prices remain stubbornly high, they're also having trouble making payments on time.

In the last quarter of 2022, credit card balances increased by $61 billion to $986 billion, a record high according to the New York Federal Reserve Bank's Quarterly Report on Household Debt released on Thursday. The previous high for credit card balances was set before the pandemic at $927 billion.

The latest data is a major reversal from two years ago when Americans were rapidly paying off credit card debt with stimulus money they received. And at the same time, they weren't taking on more debt to pay for big-ticket expenses such as vacations because of the pandemic.

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That led to a drastic decline in credit card balances. In the first quarter of 2021, for example, balances totaled $770 billion, compared with $890 billion in the same period a year earlier.

Credit card delinquencies

The share of credit card users making payments that were at least 30 days late, also known as early delinquencies, rose last quarter to 5.9% from 5.2% in the prior quarter. The share of serious credit card delinquencies, which represents payments that are 90 or more days late, rose to 4% last quarter from 3.7% in the prior quarter.

Both rates are below their pre-pandemic levels. But New York Fed researchers said it is "worrying that the delinquency rates keep on increasing."

When credit card users make late payments, it generally causes their credit scores to drop which can make it more expensive or harder for them to borrow money in the future.

Younger Americans in their 20s and 30s are experiencing the highest credit delinquency rates among all age groups.

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Credit card limit

As more Americans made purchases with credit cards over the past several quarters, credit card companies increased their credit limits for users, New York Fed data shows. A credit limit is the maximum amount of money a lender will allow you to take on at a given time.

But experts advise against spending near that level since it can cause your credit score to decline. On the whole, Americans are being responsible with this spending, the data shows.

Elisabeth Buchwald is a personal finance and markets correspondent for USA TODAY. You can follow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here

This article originally appeared on USA TODAY: US credit card debt at record high: New York Fed Household Debt report