American households are grappling with a record-breaking $18.04 trillion in debt, encompassing mortgages, auto loans, student loans, and a significant surge in credit card balances, as revealed by a recent Federal Reserve Bank of New York report. The final quarter of 2024 saw a $93 billion increase in overall debt, with credit card debt accounting for roughly half of that growth.

The total credit card debt held by Americans has reached an unprecedented $1.21 trillion. Experts at the New York Federal Reserve attribute this spike to the typical holiday shopping spree at the end of the year. They anticipate a decrease in these balances as consumers begin paying down their holiday purchases in the new year.

Elevated interest rates also contribute to the high credit card debt levels. However, a silver lining emerges as income levels have risen alongside debt, suggesting a positive economic indicator.

Delinquency rates, reflecting missed credit card payments, also saw an uptick in the fourth quarter. The report also points to increased delinquency rates for auto loans, with Americans owing nearly $1.7 trillion in this category. The surge in new and used car prices following the pandemic is cited as a primary driver of these missed payments.

Wilbert van der Klaauw, an economic research advisor at the New York Federal Reserve, noted that while mortgage delinquency rates are comparable to pre-pandemic figures, auto loan delinquency rates remain significantly high across all credit scores and income brackets.