In the Federal Reserve Bank of New York’s second quarter of 2024, household debt in the U.S. increased by $109 billion, bringing the total to a staggering $17.80 trillion. If this number doesn’t immediately hit you, let’s break it down: every sector of consumer debt, from mortgages to credit cards, is expanding. And if you’re like most Americans, you’re probably carrying more debt than you’d prefer. Here’s what’s happening and how it impacts your wallet.

Mortgages Lead the Charge

The largest piece of household debt is mortgages, accounting for $12.52 trillion—up by $77 billion from the previous quarter. If you’re a homeowner, you’ve likely felt the crunch of rising mortgage rates. 

The balance on home equity lines of credit (HELOCs) also increased, continuing a nine-quarter streak. That means more homeowners are tapping into their home equity, either to cover rising costs or to fund large purchases.

Credit Card Debt Soars

Credit card balances saw a significant uptick, rising by $27 billion this quarter, bringing the total to $1.14 trillion. Compared to a year ago, this marks a 5.8% increase, highlighting that more people are relying on credit to maintain their lifestyles. 

Unfortunately, using credit cards to cover daily expenses in today’s high-interest environment is a slippery slope.

Carrying a balance month-to-month? You’re not alone. Credit card limits rose slightly, but that doesn’t change the fact that high interest rates are burning holes in many consumers’ pockets. What’s more, delinquency rates on credit cards are creeping up, meaning more people are falling behind on payments.

Auto Loan Balances Keep Growing

Auto loans increased by $10 billion, bringing the total to $1.63 trillion. Cars are a necessity for many, but with rising prices for both new and used vehicles, Americans are stretching themselves thin to get behind the wheel. Add in higher interest rates, and suddenly that car loan feels like more of a burden than a convenience.

Student Loan Trends: A Temporary Reprieve?

Student loan balances dropped by $10 billion to $1.59 trillion. But don’t get too comfortable. This drop is likely due to payment forbearance policies that are set to expire soon. With federal student loans expected to resume payments in the latter part of 2024, many borrowers will be facing a new reality of higher monthly obligations.

Delinquency Rates: A Growing Concern

While total household debt delinquency remained steady at 3.2%, the transition rates into delinquency are rising for credit cards, auto loans, and mortgages. 9.1% of credit card balances and 8% of auto loan balances transitioned into delinquency this past year. This signals that more people are struggling to keep up with their payments—especially those on the financial edge.

Foreclosures are also making a modest comeback. 47,000 new foreclosure notations were added to credit reports, a slight increase from the previous quarter. While still lower than pre-pandemic levels, this trend could signal that financial pressures are catching up with some homeowners.

Bankruptcy: A Growing Shadow

Bankruptcy filings are creeping up, with 136,000 consumers adding a bankruptcy notation to their credit reports in Q2. Although these numbers are still lower than pre-pandemic levels, they highlight that for some, debt burdens are becoming too much to bear.

What Does This Mean for You?

The rising debt balances in virtually every category mean one thing: staying ahead of debt is becoming harder. Whether it’s the mortgage on your home, your credit card bill, or your car loan, the cost of borrowing is at its highest in years.

So, what can you do?

1. Reassess Your Budget: It’s time to make some tough choices. Look at where you can trim your spending and redirect those funds to pay down debt faster, especially high-interest credit cards.
2. Prioritize High-Interest Debt: With credit card APRs hitting record highs, paying down your balance should be priority number one. Consider transferring balances to a lower-interest card or consolidating debt through a personal loan.
3. Build an Emergency Fund: With economic uncertainty and rising household debt, having a financial cushion is more critical than ever. Aim to save enough to cover at least three to six months of essential expenses.
4. Explore Refinancing Options: If you have good credit, refinancing your mortgage or auto loan could help you lock in a lower rate and reduce your monthly payments. Just be aware of closing costs and other fees that might eat into your savings.
5. Stay Informed on Student Loan Changes: If you have student debt, make sure you’re up to date on repayment plans and potential relief options. The landscape for student loans is evolving, and missing an opportunity for assistance could cost you in the long run.

Conclusion: Debt Is Growing—But You Can Stay Ahead

The takeaway? Americans are taking on more debt at a time when interest rates are high, making it more expensive to borrow and repay. But with some strategic moves, you can minimize your debt load and protect your financial health. 

Focus on paying down high-interest balances, trim unnecessary expenses, and build a safety net for the future. As debt continues to rise, having a clear financial strategy will help you stay ahead.