Credit card debt can be a major roadblock to your financial goals, such as saving for retirement or increasing your net worth. Unfortunately, new data from the New York Federal Reserve suggests that after a debt decline, Americans are borrowing money at a rate that approaches pre–Great Recession levels. The result: Household debt is rising and credit cards are a major driver, along with mortgages, student loans and auto loans. Here’s a quick breakdown of what the Fed’s research uncovered.  

How Much Credit Card Debt Americans Have

In terms of how Americans are taking on debt, credit cards are a prime vehicle. Total credit card balances increased by 2.5% in the third quarter of 2016, with Americans owing $747 billion in credit card debt collectively. The Fed estimates that 7.1% of those owing credit card debt are delinquent by 90 days or more on at least one card. 

A further crunching of the numbers reveals that the average credit card debt among households with credit card balances totaled $16,061. On average the typical household pays $1,292 in interest on its credit card debt annually. With a Fed rate hike likely in the works, this figure could increase in 2017. (For more, see Fed Set to Raise Rates on Wednesday.) 

The Size of Total Household Debt

According to the Fed data, credit card debt contributed to a total household indebtedness in the U.S. of $12.35 trillion as of Sept. 30, 2016. That represents an increase of $63 billion over the second quarter. Overall, household debt is still 2.6% below the $12.68 trillion peak in the third quarter of 2008. However, total household consumer debt has risen 10.7% above the $10.34 trillion low reached in the second quarter of 2013. 

Also factoring into the picture for millions of Americans: student loan debt, with total student loan balances reaching $1.28 trillion as of the third quarter. Auto loans are the third largest debt expenditure after mortgages and student debt, with Americans owing $1.14 trillion on their vehicles. 

Mortgage Debt Shrinks Slightly

According to the Fed, mortgage debt hit $8.35 trillion in the third quarter, a $12 billion drop from the second quarter. Over that same period balances owed on  home equity lines of credit (HELOCs) were reduced by $6 billion, to $472 billion total. Overall, mortgage debt had the lowest delinquency rate of any type of debt, at 1.6%.

So what does that mean? While Americans are seeing their debt balances on credit cards, car loans and student loans increase, it would appear that they’re being proactive about chipping away at their mortgages. The fact that delinquency rates are lowest for home loans suggests that Americans may be more concerned about meeting their obligations to their mortgage versus paying off other types of consumer debt. (For more, see The 7 Best Ways to Get Out of Debt.)

That’s a complete reversal of behavior compared to what was happening during and immediately after the economic collapse. A TransUnion white paper, for example, found that during the peak of the financial crisis, the delinquency rate for mortgages was nearly triple that of credit cards among Americans who owed both types of debt. 

What’s Behind the Debt Creep?

The increase in household debt may be attributable to two primary factors: a steady increase in the cost of living and stagnation in wages. Since 2003 household incomes have increased by 28% but the cost of living has climbed by 30%. That gap doesn't sound big, but the disparity between earning and spending may be a driving force for some Americans to turn to credit cards to cover the gap. Some items, such as medical costs (57%) and food and beverage prices (36%) increased massively more.

As of 2015 the median household income in the U.S. was $55,775, which was 3.8% higher than 2014. According to the Census Bureau, it was the third consecutive year that Americans saw a significant statistical increase in the size of their paychecks. Still, the increase may not be enough to keep pace with rising prices of food, housing and transportation. 

The issue is compounded in cities where the cost of living is exponentially higher than the national median. In Brooklyn, N.Y., for example, a part of the city where many neighborhoods are rapidly gentrifying, it’s 81.7% higher than average. At the same time the median household income in Brooklyn – which has many poor residents as well as wealthy ones – is just 60% of the national average. Looking for a higher paying job or less expensive housing are two ways to cope, but for many Americans that simply may not be an option. (For more, see Most Expensive Housing Costs Around the World.) 

The Bottom Line

If you’re one of the millions of Americans dealing with credit card, mortgage, car loan or student loan debt, the approaching new year is a good time to focus on paying down what you owe. For example, transferring your credit card debt to a card with a lower balance or consolidating your student loans (see Time to Consolidate Your Student Loans?) could allow you to trim the interest costs so you can repay what you owe faster. Beyond mapping out a debt repayment plan, it’s also a good idea to review your budget and look for opportunities to cut spending. Your new year will be a happier one if you’re not adding to your debt to maintain your standard of living