Federal Reserve Economic Data

In 2023, outstanding credit card balances in the United States surpassed $1 trillion for the first time. This milestone has raised concerns about the health of household finances and the implications for consumer spending going forward.

The FRED graph above shows three measures of credit card debt, with all balances normalized to 100 in the first quarter of 2011 to better illustrate longer-run trends: The blue line shows the balances, the green line shows the balances adjusted for inflation, and the red line shows the balances as a percentage of disposable income.

The blue line shows the growth in balances on credit cards and other forms of revolving credit issued by US commercial banks since 2011. In 2023 Q3, balances were 18.2% higher than at the start of the recession in 2020 Q1 and 34.8% higher than the post-recession low in 2021 Q1.

This growth in credit card balances since 2021 has occurred alongside substantial inflation. Measured by the consumer price index (CPI), inflation reached a peak annual rate of 8.9% in June 2022. In total, the CPI rose 20% between May 2020 and October 2023, which is close to the growth in total credit card balances over this period. What do we see if we look at “real” balances—that is, nominal balances divided by the CPI? As the green line shows, in 2023 Q3, “real” credit card balances were essentially equal to their level in 2020 Q1.

Are these higher balances putting increased pressure on household finances? That depends on several factors, including the growth in other types of household debt, interest rates, and disposable income. Between 2020 Q1 and 2023 Q3, nominal personal disposable income rose by more than nominal credit card balances. As the red line shows, relative to disposable income, credit card balances were actually slightly smaller in 2023 Q3 than they had been in 2020 Q1. Of course, interest rates have risen substantially over this period, so the cost of carrying a balance has increased.

This isn’t a full analysis of the state of household balance sheets, but the growth in outstanding credit card balances does seem less alarming when compared with the growth in household income over the same period. For more insights on this topic, check on US credit scores and credit use rates.

About the data: These data don’t include balances on credit cards issued by non-bank entities, but credit card debt is mainly held by banks, so this measure is pretty solid. Also, by convention, FRED graphs show quarterly data as occurring in the first month of a quarter. So the peak in credit card balances shows as occurring in January 2020, or one month before the beginning of the recession. However, based on weekly data, the peak in credit card balances occurred during the first week of March.

How these graphs were created: Search FRED for and select “Consumer Loans: Credit Cards and Other Revolving Plans, All Commercial Banks.” From the graph, click on “Edit Graph” and open the “Add Line” tab, then search for and select “Disposable Personal Income” and “Consumer Price Index for All Urban Consumers, All Items in U.S. City Average.” For the latter two lines, add the Consumer Loans series under the “Customize data” section and set the formula to 100*(b/a) by clicking “Apply.” For all three lines, set the units to “Index (Scale value to 100 for chosen date),” enter the date “2011-01-01,” and set the frequency to “Quarterly.” Set the earliest date in the window to “2011-01-01.”

Suggested by David Wheelock.

Home mortgages are households’ largest source of debt. And since 2010, student loans have been their second-largest source of debt.

The FRED Blog has discussed student loan and household debt before, in relation to overall economic activity. Today, we compare student loan debt with three other categories of consumer credit:

• Revolving consumer credit, mostly credit card debt (blue area)
• Automobile loans (green area)
• Student loans (orange area)
• Other, non-revolving consumer credit (purple area)

The FRED graph above shows quarterly data on each category from the Board of Governors of the Federal Reserve System. The units are in millions of dollars, but are presented in stacked areas to easily show each category as a percentage of the entire pool of consumer credit.

Data on student loans, as a standalone category of consumer credit, has been reported only since 2006, so we can’t observe the rollout of the Federal Direct Student Loan Program in 1994. But the growing share of student loans, as a fraction of overall consumer credit, is easy to see: It’s risen from 20.6% in 2006 to 35.6% in 2024. Learn even more here.

How this graph was created: Search the alphabetical list of FRED releases for “Z.1 Financial Accounts of the United States” and select “Quarterly: L.222 Consumer Credit.” Select the four series listed under the heading “Memo” naming the types of consumer loans and click “Add to Graph.” Use the “Format” tab to change the graph type to “Area” and the stacking option to “Percent.”

Suggested by Diego Mendez-Carbajo.

Your credit report is a record of your credit history that includes information about your identity, outstanding balances and history of making payments, publicly available information, and inquiries made by organizations or individuals about your credit history. Your credit score is a number that reflects the information in your credit report. See this Consumer’s Guide from the Board of Governors of the Federal Reserve to learn more about it.

Credit scores are used by lenders when deciding whether to grant you credit, what terms you are offered, or the rate you will pay on a loan.

The FRED graph above shows data from the Federal Reserve Bank of Philadelphia about the change in credit scores by three groups of credit card holders: those with the lowest 10% of credit scores (the blue line); those with the lowest 25% of credit scores (the red line); and those with median, or middle-of-range, credit scores (the green line). Personal credit scores may change from quarter to quarter, so individual credit card holders could potentially move between groupings. The data were transformed into a custom index with a value of 100 in the third quarter of 2012, the first available observation, to highlight a striking feature of their recent changes.

During the onset of the COVID-19 pandemic, the credit scores of many credit card holders increased noticeably. This jump in scores was pretty much irrespective of how high or low those scores were to begin with. More flexible repayment terms on existing debts, reduced spending during the periods of lockdown and social distancing, and substantial income subsidies provided by the government improved the credit scores of many people. However, all those factors boosting personal finances were temporary.

Recent research from Juan M. Sánchez and Masataka Mori at the St Louis Fed finds some evidence that many individuals who experienced a fast improvement in credit scores during the COVID-19 pandemic are not as financially stable as those who improved their credit scores after the 2007-2009 recession, also known as the Great Recession. As a consequence, people who were likely to be financially distressed prior to 2020 and saw their credit scores improve during the pandemic also make up a significant proportion of credit card holders recently missing multiple payments on their existing credit card balances. In short: Their credit scores may have improved, but their long-term underlying ability to repay a loan in time did not.

For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St Louis, which offers an array of economic analysis and expertise provided by our staff.

How this graph was created: In FRED, search for “Large Bank Consumer Credit Card Balances: Current Credit Score: 10th Percentile.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Large Bank Consumer Credit Card Balances: Current Credit Score: 25th Percentile.” Repeat the last step to add the third series, “Large Bank Consumer Credit Card Balances: Current Credit Score: 50th Percentile.” Next, select the “Edit Line 1” tab to customize the units by selecting “Index (Scale value to 100 for chosen date)” and enter “2012-07-01” in the date box. Click on “Copy to all” to apply the unit transformation to all the series.

Suggested by Diego Mendez-Carbajo.