The end of July saw American credit card debt collectively hit $1 trillion for the first time ever.
According to Axios, the Federal Reserve Bank confirmed on Tuesday that credit card balances in the United States increased in the second quarter of 2023 by $45 billion, or 4.6 percent, to a new total of $1.03 trillion. However, the collective credit card debt still has a lower share of American gross domestic product (GDP) than it did in 2010 or pre-COVID 2020.
Some claim that the increase in credit card debt reflects rising consumer confidence as the economy leaves behind the era of the Chinese Coronavirus pandemic. American consumers now hold roughly $4.1 trillion more in total bank deposits than they did pre-COVID, and increasingly spent more on travel, dining, and experiences in the second quarter.
Overall, there are roughly 70 million more credit card accounts open today than there were in 2019, with 69 percent of Americans having an account in the second quarter, up from 65 percent in December of 2019. In December of 2013, 59 percent of Americans had a credit card account.
However, credit card debt accounts for just 6 percent of total deposits that the average household has in the bank, the lowest percentage in 20 years. And experts warned about additional financial risks that may dampen any expectations that the economy could turn around in the near future.
“American consumers have so far withstood the economic difficulties of the pandemic and post-pandemic periods with resilience,” wrote Fed researchers on the Liberty Street Economics blog. “However, rising balances may present challenges for some borrowers, and the resumption of student loan payments this fall may add additional financial strain for many student loan borrowers.”