Under High Interest Rate Pressure, US Credit Card Debt Reaches a Record High of 1,570 Trillion Won

In a situation of continued high interest rates, U.S. credit card debt has surpassed 1,500 trillion won, marking an all-time high. The delinquency rate was also confirmed to be the highest in 13 years.

According to the household credit report released on the 6th (local time) by the Federal Reserve Bank of New York, U.S. credit card debt reached $1.14 trillion (approximately 1,570 trillion won) in the second quarter. This is an increase of $27 billion (5.8%) compared to the previous year, representing the largest scale ever recorded.

The credit card delinquency rate also soared. The delinquency rate for the second quarter of this year (as of July 30) was 9.1%, the highest since the first quarter of 2011. The long-term delinquency rate over 90 days also jumped from 5.1% in the second quarter of last year to 7.2% in the second quarter of this year. In particular, the delinquency rate among young adults aged 18 to 29 reached 10.5%. Those aged 30 to 39 also showed a high level at 9.7%.

The New York Fed analyzed that these groups were likely more affected by the COVID-19 pandemic. At a press conference that day, Fed researchers pointed out that a significant portion of the millennial generation first entered the labor market during the late 2000s recession and may have experienced long-term effects, suggesting the possibility of excessive borrowing during the pandemic period. The New York Fed added that a large number of delinquents are renters who do not own homes and have low credit limits, making them more financially vulnerable.

Earlier, a survey conducted by Achieve targeting 2,000 U.S. adults with debt found that 57% of respondents rely on credit cards for living expenses. Additionally, 36% of them said they have difficulty paying regular debts, including credit card bills, on time. Among those with delinquency experience, most cited unemployment and income reduction as reasons.

Another report from Bankrate showed that half of credit card holders carry debt every month. Ted Rossman, senior analyst at Bankrate, said, "High inflation and high interest rates are eroding Americans' savings," adding, "More people are carrying debt for longer periods."

Moreover, credit cards tend to have particularly high interest rates. Previously, due to U.S. interest rate hikes, the average credit card interest rate soared to nearly 20%, close to an all-time high.