Americans have borrowed more than ever on their credit cards in the last quarter, the New York Federal Reserve Bank has said, with balances surpassing $1 trillion for the first time even as overall household debt loads were largely unchanged.

Researchers said that credit card balances rose by $45 billion to $1.03 trillion in the second quarter of 2023, the regional Fed bank said in its latest quarterly household debt and credit report, reflecting robust consumer spending and higher prices due to inflation.

Household debt ticked up 0.1 percent to $17.06 trillion, as mortgage balances — the biggest portion, and typically the biggest driver, of overall household debt — were largely unchanged.

Meanwhile, the data showed that credit card delinquencies are at an 11-year high, as measured using a four-quarter average.

But the quarter-to-quarter trend appeared less alarming, with New York Fed researchers noting a levelling out near pre-pandemic levels in the most recent two quarters.

"Despite the many headwinds American consumers have faced over the last year - higher interest rates, post-pandemic inflationary pressures, and the recent banking failures - there is little evidence of widespread financial distress for consumers," New York Fed researchers wrote in a blog accompanying the data release.

Though rising balances will challenge some borrowers, and student loan borrowers may be squeezed as student loan repayments resume this fall, they wrote, "household credit shows some early signs of stabilising at pre-pandemic health, albeit with higher nominal balances."

Student loan balances declined by $35 billion to $1.57 trillion in the second quarter, the data showed.

New York Fed researchers attributed the decline to the timing of the academic year, as well as to some small forgiveness programs kicking in.

Mortgage balances

The data showed that mortgage originations increased to $393 billion in the April-June period, from a nine-year low of about $324 billion last quarter.

They remain much lower than the average in the first two years of the Covid-19 pandemic, reflecting the impact of the US central bank's aggressive interest rate hikes over the past 15 months.

Overall mortgage balances ticked down to $12.01 trillion, from $12.04 trillion in the prior quarter, reflecting some changes in credit reporting that are expected to reverse next quarter, New York Fed researchers said.

Auto loan balances continued their long-term increase, rising by $20 billion to $1.58 trillion in the second quarter, the data showed.

Originations rose about 11 percent to $179 billion, reflecting the sharp rise in car prices; the number of newly opened loans remains below pre-pandemic levels, the report said.