Americans racked up record amounts of debt last year, sparking fears delinquency rates could spread to all types of loans.
Total household debt increased to $18.04 trillion to end the year, with Americans adding another $93 billion between October and December alone, the Federal Reserve Bank of New York reported earlier this month.
Mortgage balances hit $12.6 trillion, up $11 billion over the quarter. Home Equity Lines of Credit balances rose for the 11th consecutive quarter to reach $396 billion, increasing by $9 billion over the quarter.
Debt levels increased among all other categories as well. Credit card balances hit $1.21 trillion, increasing by $45 billion, and auto loan balances stood at $1.66 trillion, up $9 billion. Student loan debt increased by $9 billion to $1.6 trillion.
The higher debt loans have not yet led to unusually high delinquency rates across loan types, but there are exceptions.
Auto loan delinquencies are “elevated” and “broad-based across credit scores and income levels,” the Fed said. Mortgage rate delinquencies remain at pre-pandemic levels, however.
While there has not been a spike in delinquencies, credit counselors are still concerned about the record debt levels.
“The latest data from the Federal Reserve confirms what we’ve been seeing in our own data,” said Mike Croxson, chief executive officer of the National Foundation for Credit Counseling (NFCC).
The foundation’s measure of financial stress jumped to 5.7, up from a low of 3.4 in the third quarter of 2021, indicating that Americans have been experiencing increasing financial pressure. The NFCC forecasts a further rise in stress levels to 6.1 by the end of March.
The foundation called rising credit card balances and delinquency rates particularly unsettling. Credit card balances increased the most among all loan types.
“The rise in credit card debt and delinquencies in the fourth quarter of 2024 is a clear indication that consumers are struggling to manage their finances,” Croxson said.
