American borrowers are maxed out, amid high interest rates and rising prices.

U.S. household debt hit a new record in the first quarter of 2024, rising $184 billion to $17.69 trillion. And close to 1 in 10 credit card balances and 1 in 12 auto loans became delinquent, according to the Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York, released this week.

“In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups,” said Joelle Scally, Regional Economic Principal within the Household and Public Policy Research Division at the New York Fed, in a statement. “An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households.”

Mortgage balances also rose $190 billion from the previous quarter, reaching $12.44 trillion at the end of March.

Per the advisory, “Balances on home equity lines of credit (HELOC) increased by $16 billion, representing the eighth consecutive quarterly increase since Q1 2022, and now stand at $376 billion. Credit card balances decreased by $14 billion to $1.12 trillion. Other balances, which include retail cards and consumer loans, also decreased by $11 billion. Auto loan balances increased by $9 billion, continuing the upward trajectory seen since 2020, and now stand at $1.62 trillion.”

The New York Fed reported that 3.2% of outstanding debt was in some stage of delinquency at March’s end.

Demography of debt

A Liberty Street Economics blog post noted that “younger card users and card users living in low-income areas are more likely to be maxed-out” than others. The post noted that “the share of maxed-out borrowers has been increasing from pandemic lows and is approaching pre-pandemic levels, and the delinquency transition rates of these maxed-out borrowers are now noticeably higher than pre-pandemic, resulting in higher transition rates into credit card delinquency overall.”

Speaking of those who carry a balance on credit cards, Ted Rossman at Bankrate told NPR, “Credit card debt is very costly, with the average interest rate topping 20%. Rossman says borrowers who make only the minimum monthly payment can take nearly two decades to pay down their debt. On an average balance of $6,360, the interest alone would total $9,500.”

Investopedia reported that the average annual percentage rate on credit cards was 21.47% at the end of 2023, “a marked increase” from the 2019 average of 15.05%. “Higher interest rates can make it more difficult to pay off balances because more of the minimum monthly payment goes toward interest, instead of the principal.”

Who’s carrying the most credit card debt?

According to Investopedia, Gen X has the largest share, responsible for nearly 34%. Millennials have racked up more than 29% of credit card debt, followed by boomers at nearly 27%. Generation Z is responsible for a smidge over 6%, while the silent generation owes not quite 4% of the total.

“In large measure, this reflects where each generation currently is in terms of their peak spending years,” the article said.

Retiring that debt

If you have high debt, take heart. There are smart ways to pay it off, according to Bank of America, which offers four strategies to speed up the process:

  • Target one credit card at a time. You still have to pay at least the minimum on each card, but focus on paying down the balance on one so you can retire that debt. The company says you can either focus on high-interest debt first, or pay the one with the smallest balance and then add what you were paying on it to what you pay on the second-highest-balance card.
  • Pay more than the minimum. Your credit card statement tells you how long it will take to retire the debt if you just pay the minimum. With high balances, it could be years and years. Pay more and you will save on interest.
  • Consolidate debt. Combine higher interest debt into debt with a lower rate of interest so you can pay it off faster and pay less in interest. The company recommends transferring balances (pay attention to the balance transfer fees) or tap into a home equity loan, which may have a lower interest rate.
  • Understand your spending, then look for ways to cut back. Take what you save and put it on your debt.

CBS News explains two popular strategies to pay off debt more quickly.

In the “Snowball” method, you pay off the smallest debt first. Finance experts say that there’s a psychological boost to retiring a debt, even if it’s not the one with the highest interest. Then you can move onto the next smallest.

The “Avalanche” method hits the debt with the highest interest rate first, which will reduce the amount of interest paid over time.

In both cases, you also continue making all minimum payments. And you add what you were paying on the one(s) paid off so that you are able to pay more and more on each and retire those debts faster.