Americans’ Household Debt Hit Nearly $16 Trillion in Q1 2022

Consumers to Pay $3.3 Billion Extra in Credit Card Interest

Credit cards as seen in Orlando, Fla., on July 1, 2021. John Raoux/AP Photo

Household debt in the United States increased in the first quarter of 2022, reaching $15.84 trillion despite rising inflation and interest rates, according to a report on Household Debt and Credit published by the Federal Reserve Bank of New York.

The report shows that household debt levels have exceeded pre-recession peaks in all categories except for home mortgages. Non-housing debt, which includes consumer debt and student loans, has increased the most since 2007.

That’s $1.7 trillion more than at the end of 2019, just before the COVID-19 pandemic began, the May 10 report stated (pdf).

“Mortgage balances shown on consumer credit reports increased by $250 billion during the first quarter of 2022 and stood at $11.18 trillion at the end of March. … Non-housing balances grew by $17 billion, boosted additionally by a $7 billion increase in other balances, which include consumer finance loans, retail cards, and unclassified loans,” the report states.

What Is a Current Debt?

The share of current debt that transitioned into delinquency increased slightly for nearly all types of debt but remains historically low. The rate at which people move away from paying their credit cards on time increased by 2 percent, while the rates for mortgages, auto loans, and home equity lines of credit all stayed the same. While the number of new foreclosures remains very low, there was a small spike in new foreclosures during Q1 2022.

Mortgage originations declined to $859 billion in the first quarter following a “brisk” 2021. This reflects an “unwinding in the demand for refinances,” said Andrew Haughwout, director of the household and public policy research division at the New York Fed, in a May 10 press release.

Homeownership rates have been on a steady decline since their peak at the end of 2018. The decline has been driven largely by younger adults leaving home and downsizing, Haughwout said. This trend is expected to continue throughout 2022 as young adults move into new homes with more amenities and closer proximity to jobs.

Mortgage Originations Data

Mortgage originations were still $197 billion higher than the volume seen during the first quarter of 2021.

According to the report, 68 percent of mortgage originations were among borrowers with credit scores exceeding 760. A new foreclosure notation was added to the credit reports of about 24,000 individuals, up from just 9,000 individuals in the fourth quarter of 2021.

When it came to credit cards, the first quarter balance declined $15 billion from the fourth quarter of 2021, which officials described as a typical seasonal change, and the total first-quarter credit card balance of $840 billion was still $86 billion less than where it stood in the fourth quarter of 2019, before the start of the pandemic.

Aggregate limits on credit cards were at $4.12 trillion in the first quarter of 2022, which is $224 billion higher than before the pandemic.

There were 109 million credit inquiries reported in the previous six months, a 5.1 percent decline compared to the fourth quarter of 2021. However, the first quarter of 2022 saw 229 million new accounts being opened, an uptick compared to the previous quarter. The average credit card balance per consumer was $3,834 in the first quarter of 2022. This figure represents a 4 percent increase compared to where it stood before the pandemic, but it is still lower than what it was six months prior. The average interest rate on new credit cards issued during this time period was 18.5 percent, which is 0.14 points higher than where it stood before the pandemic but still lower than where it was in late 2021 and early 2022.

According to the Consumer Financial Protection Bureau, Americans shell out $120 billion in credit card interest payments and fees annually. The Federal Reserve’s 50-basis-point interest rate hike on May 4, intended to combat surging inflation, will require consumers to pay an extra $3.3 billion in credit card interest this year, according to a study by personal finance publication WalletHub. The study found that the average credit card interest rate in the United States is currently 18 percent, a figure that has been climbing steadily since 2012.

However, nine out of 10 Americans are more worried about soaring gas and grocery prices than rising credit card rates, WalletHub reported.

Auto loan balances rose by $11 billion to a total of $1.47 trillion in the first quarter of 2022, according to the Household Debt and Credit report. Student debt, which rose by $14 billion, totaled $1.59 trillion.