Average credit card balances jump 10% to a record $6,360, and more consumers fall behind on payments
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Credit card debt has notched another new high. Americans now owe $1.13 trillion on their credit cards, the Federal Reserve Bank of New York reported Tuesday. Balances jumped 10% from a year ago, according to a separate quarterly credit industry insights report from TransUnion, with the average balance per consumer hitting $6,360, also a historic record.

'It's not all bad news'

"It's not all bad news," said Ted Rossman, Bankrate's senior industry analyst. Cardholders who pay their bill in full every month reap the benefits of cash back and travel rewards without paying interest. "The big fork in the road is whether or not you carry a balance," he said. In that case, credit cards are one of the most expensive ways to borrow money. The average credit card charges a record high 20.74%, according to Bankrate. At more than 20%, if you made minimum payments toward the average credit card balance, it would take you more than 17 years to pay off the debt and cost you more than $9,000 in interest, Rossman calculated.

Millennials increasingly lean on credit

Still, consumers often turn to credit cards, in part because they are more accessible than other types of loans. Overall, an additional 20.1 million new credit accounts were opened in the fourth quarter of 2023, boosted in part by subprime borrowers looking for additional liquidity, according to Wise. Subprime generally refers to those with a credit score of 600 or below, according to TransUnion. Many people in this group are millennials, he said, who are burdened by high levels of student loan debt and the housing affordability crisis. "If you can't afford to buy and your rent keeps going up, that's not a very happy set of circumstances," Wise said.

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