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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’s all-time high<\/a>. The total is up 2.3% from the previous quarter.<\/p>\n At the same time, “we are still seeing elevated delinquency rates for credit cards,”\u00a0the New York Fed researchers found, with 6.93% of balances transitioning to delinquency over the last year.<\/p>\n<\/div>\n “This looks to be a little bit of catch up,” the researchers said on a press call Tuesday, in part due to “unusual leniency during the pandemic” and because consumers “may have overextended themselves” as inflation spurred higher costs in the years since.<\/p>\n “Those are things we have been keeping an eye on,” 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 “There’s a growing K-shaped split in the consumer landscape, with subprime borrowers falling behind,” Tom O’Neill, 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> “I think most people are generally doing OK, but it wouldn’t take much for them to not be OK,” said Matt Schulz, chief credit analyst at LendingTree. “So many Americans are a job loss, income reduction or medical emergency away from real financial trouble.”<\/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. “Their card usage is counted among balances but isn’t true debt like the other 46% of cardholders are facing,” said Ted Rossman, Bankrate’s 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 “There’s a huge difference between someone who uses credit cards for rewards and convenience versus someone who is carrying pricey debt for years.”<\/p>\n Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n\n‘A growing K-shaped split’<\/h2>\n
Trump floats tariff ‘rebate’ 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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