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Credit card<\/a> balances are ticking higher in 2025, according to a\u00a0new quarterly report on household debt<\/a>\u00a0from the Federal Reserve Bank of New York.<\/p>\n Balances rose by $27 billion in the second quarter to a collective $1.21 trillion \u2014 in line with last year\u2019s all-time high<\/a>. The total is up 2.3% from the previous quarter.<\/p>\n At the same time, \u201cwe are still seeing elevated delinquency rates for credit cards,\u201d\u00a0the New York Fed researchers found, with 6.93% of balances transitioning to delinquency over the last year.<\/p>\n<\/div>\n \u201cThis looks to be a little bit of catch up,\u201d the researchers said on a press call Tuesday, in part due to \u201cunusual leniency during the pandemic\u201d and because consumers \u201cmay have overextended themselves\u201d as inflation spurred higher costs in the years since.<\/p>\n \u201cThose are things we have been keeping an eye on,\u201d the New York Fed Researchers said.<\/p>\n Credit card debt had remained stable for decades. However, in the years since the\u00a0pandemic, households largely spent down their excess savings while the cost of living jumped, which sparked a sharp rebound in credit card balances.<\/p>\n<\/div>\n Separate data from Equifax<\/a> found that many consumers continue to spend, despite high prices and high borrowing costs, while credit card delinquency rates\u00a0<\/a>remain relatively flat.<\/p>\n But subprime borrowers\u00a0show signs of strain, with a rising share of the overall debt, according to Equifax.\u00a0Subprime generally refers to those with a\u00a0credit score<\/a>\u00a0of 600 or below.<\/p>\n \u201cThere\u2019s a growing K-shaped split in the consumer landscape, with subprime borrowers falling behind,\u201d Tom O\u2019Neill, market pulse advisor at Equifax, said in a statement.<\/p>\n Many subprime borrowers are younger cardholders with shorter credit histories.\u00a0These are also the borrowers more at risk<\/a> of facing debt repayment challenges now that the Trump administration has restarted\u00a0collection efforts\u00a0<\/a>on defaulted federal\u00a0student loans<\/a>.<\/p>\n More from Personal Finance:<\/strong> \u201cI think most people are generally doing OK, but it wouldn\u2019t take much for them to not be OK,\u201d said Matt Schulz, chief credit analyst at LendingTree. \u201cSo many Americans are a job loss, income reduction or medical emergency away from real financial trouble.\u201d<\/p>\n On the other side of the divide, just over half of cardholders<\/a> \u2014 or 54% \u2014 typically pay in full, thereby avoiding interest, according to another report by Bankrate. \u201cTheir card usage is counted among balances but isn\u2019t true debt like the other 46% of cardholders are facing,\u201d said Ted Rossman, Bankrate\u2019s senior industry analyst.<\/p>\n By way of example: With annual percentage rates just over 20%, if you made minimum payments toward the average credit card balance ($6,371), it would take you more than 18 years to pay off the debt and cost you $9,259 in interest over that time period, Rossman calculated.<\/p>\n \u201cThere\u2019s a huge difference between someone who uses credit cards for rewards and convenience versus someone who is carrying pricey debt for years.\u201d<\/p>\n Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n\n\u2018A growing K-shaped split\u2019<\/h2>\n
Trump floats tariff \u2018rebate\u2019 for consumers<\/a>
Senate bill aims to increase affordable housing<\/a>
Student loan borrowers \u2014 how will the end of the SAVE plan impact you? Tell us<\/a><\/p>\n
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