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Credit card in the U.S. debt just soared to a new record. Here’s what it means.
U.S. households are carrying a record amount of credit card debt, according to a new Federal Reserve Bank of New York report released Tuesday. The bank said the data indicates financial distress is on the rise, particularly among younger and lower-income Americans.
Total household debt grew by $212 billion, rising to $17.5 trillion in the fourth quarter of 2023, the Fed’s quarterly report on household debt and credit shows.
Credit card balances rose by $50 billion to hit a record $1.13 trillion. Inflation and higher interest rates are contributing to rising credit card debt, resulting in more Americans struggling to pay down their credit card balances, according to Bankrate’s senior industry analyst Ted Rossman.
“We’re seeing more people carrying more debt for longer periods of time,” Rossman said in an emailed statement. “For example, 49% of credit cardholders carry debt from month to month, up from 39% in 2021.”
Most analyses of Americans’ financial health tend to tell a tale of two consumers. On one side are the roughly two-thirds of Americans who own their homes and those who’ve invested in the stock market and done substantially well. They generally had the savings cushion necessary to weather high inflation.
But for the rest of America, things are looking rough.
“You have these noticeable pockets of consumers — mostly middle- and lower-income renters who have not benefited from the wealth effect of higher housing prices and stock prices — who are feeling financial stress and that’s driving up these delinquency levels. They’ve been hit very hard by inflation,” said Warren Kornfeld, a senior vice president at Moody’s.
Credit card delinquencies are surging
Consumers who carry credit card debt are also feeling the impact of higher interest rates, which have been pushed upwards due to the Federal Reserve’s flurry of interest rate hikes. That’s making it more costly to carry a balance on a credit card, with Rossman noting that the average credit card annual percentage rate is at a record 20.74%.
Credit card delinquencies have also soared more than 50% in the past year, with the Fed’s report finding that about 6.4% of all accounts are now 90 days past due, up from 4% at the end of 2022.
Mortgage balances increased by $112 billion to reach $12.25 trillion.
Debt holders are also carrying their debt for longer periods of time, as it compounds, and they struggle to pay it off. Credit card delinquency rates are rising, too.
Other types debt, including auto loan balances, grew too, hitting $1.61 trillion.
Only student loan balances were mostly flat, increasing by $2 billion and standing at $1.6 trillion.
—With reporting by the Associated Press.
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Meet Pesto the Penguin, Australia’s nearly 50-pound baby penguin capturing hearts worldwide with its hefty fluff
An aquarium in Australia is now home to the biggest baby penguin it has ever seen. Pesto, a 9-month-old king penguin, has weighed in at just under 50 pounds — more than the weight of both his parents combined.
Sea Life Melbourne Aquarium has been sharing Pesto’s journey since he hatched on Jan. 30. It didn’t take long for the fluffy baby animal to shock aquarium employees, but also win over their hearts. By April 24, when Pesto was just 3 months old, he already weighed 9.1 kilograms, about 20 pounds. According to the Associated Press, his foster parents Hudson and Tango weigh 11 kg, about 24 pounds, each.
“He eclipses them now, which also makes him look comically large,” Melbourne aquarist Jacinta Early told CBS News’ partner BBC.
Rod McGuirk / AP
By early September, the aquarium said Pesto weighed in at just over 46 pounds, and by the end of the month, the AP said Pesto had reached 49 pounds.
The aquarium says on its website that many factors contribute to Pesto’s “impressive weight.”
“Firstly, his biological dad, Blake, is our biggest and oldest penguin,” the aquarium says on its website. “Secondly, he’s had amazing parents raising him! So, the combination of good genes and good parents explains his current weight, but he will lose a lot of this when he fledges (develops his adult feathers).”
His “very healthy appetite” is also a factor, Early told the BBC. Pesto will eat up to 30 fish that are hand-fed to him ever day.
King penguins are the second-largest penguin species in the world, according to the American Bird Conservancy, and will typically fledge when they’re 14 to 16 months old. While male penguins are usually slightly larger than females, the Australian Antarctic Program says that the average penguin size is far below Pesto’s current size, with peak weights ranging between 10 and 15 kg — 22 to 33 pounds — during courting periods.
“If I poked him, my entire finger would completely [disappear] deep in his feathers,” Early said. “When he does start to fledge, he’ll lose a lot of that baby fluff, and he’ll also lose much of that weight, so he’ll slim down nice and sleek.”
Keepers at the aquarium told the Associated Press they expect him to end up at around 33 pounds after he loses “that really adorable baby fluff.”
Videos the aquarium has posted of Pesto have taken the internet by storm.
Even Katy Perry has joined in on the love for Pesto. In one TikTok that’s racked up more than 4 million views, aquarium staff members are seen dancing with Pesto to one of Perry’s songs. Perry responded, saying she “will come by and get a blessing” before her expected performance at the Australian Football League’s grand final.
“Our chonky King workin’ it,” the aquarium says in another video of the massive baby penguin walking behind one of the adult birds in the enclosure — with a strut that can only be described as a seemingly difficult waddle.
The Associated Press says that Pesto has been the only king penguin to hatch at the aquarium so far this year and the first since 2022. That year, there were just six hatchlings.
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Meet Pesto the Penguin, Australia’s nearly 50-pound baby penguin capturing hearts worldwide with its hefty fluff