Household debt increases by 2% in Q2 amid rising inflation

Aug. 2 (UPI) -- Household debt increased by 2% in the second quarter of 2022, boosted in part by the largest year-over-year increase in credit card balances in more than two decades, the Federal Reserve Bank of New York reported Tuesday.

Overall household debt increased by $312 billion to $16.15 trillion, which is $2 trillion higher than the end of 2019 and just before the start of the COVID-19 pandemic.

U.S. consumers saw the largest overall debt increase in mortgages, $207 billion to a total of $11.39 trillion by the end of June. Among non-housing debt, student loans increased from $1.58 trillion in the first quarter of 2022 to $1.59 trillion; auto loans increased from $1.47 trillion to $1.5 trillion; credit card debt increased from $840 billion to $890 billion; and all other debt -- including retail cards and other loans -- increased from $450 billion to $470 billion.

Overall, non-housing debt grew by $103 billion or 2.4%, the largest increase since 2016.

The Fed noted that credit card debt saw a 13% from the second quarter of 2021 to the end of June, the largest jump in more than 20 years as more Americans relied on borrowing as prices rose.

"The second quarter of 2022 showed robust increases in mortgage, auto loan and credit card balances, driven in part by rising prices," said Joelle Scally, administrator of the Center for Microeconomic Data at the New York Fed. "While household balance sheets overall appear to be in a strong position, we are seeing rising delinquencies among subprime and low-income borrowers with rates approaching pre-pandemic levels."

The amount of debt that went into delinquency during the second quarter was "historically very low," the Fed said. For credit cards, auto and other loans, there was a 0.5% increase in transition into delinquency, while home equity lines of credit went into delinquency at a rate of 0.7%.