American consumers now carry more than 1.1 trillion dollars in outstanding credit card balances, a new record that represents a 28 percent increase from pre-pandemic levels. More concerning to economists is the rising share of balances subject to the full interest rate, currently averaging 21.7 percent annually. Total interest paid by American consumers on revolving credit has nearly doubled over four years.
Delinquency rates for credit card minimum payments have risen above pre-pandemic highs, particularly among borrowers under 35 and those in the lowest two income quintiles. Banks are beginning to tighten credit card underwriting standards and reduce credit limits for high-utilization accounts, moves that will constrain spending power for the households most dependent on revolving credit to bridge monthly income shortfalls.
