Household credit card debt had its largest quarterly increase in at least 22 years, according to new data released by the New York Federal Reserve on Tuesday.

Despite the $52 billion increase in credit card debt — the largest since the Fed started tracking the data — the $860 billion balance is still $67 billion lower than at the beginning of the pandemic, and the share of credit card holders in delinquency has fallen. The last quarter of the year is also when people typically splurge on holiday spending, so some of the increase is expected.

Nevertheless, after an initial dip early in the pandemic, credit card debt has steadily increased back up toward the record high of $927 billion, set in 2019, reflecting a larger trend that isn't fully explained by holiday shopping.

"We're beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances," says Donghoon Lee, a research officer at the New York Fed, in the Fed's third quarter report. "At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends."

Inflation hasn't helped either, as the stuff that people usually buy with credit cards, such as furniture, gas or hotels, has increased 7% overall in the last year, as measured by the Consumer Price Index.

To combat inflation, the Federal Reserve has indicated that it will almost certainly raise the federal funds rate in 2022, which determines the interest rate consumers pay for credit card purchases. When the Federal Reserve raises the federal funds rate, changes to credit card interest rates typically follow, usually within a billing cycle or two.

"The highest inflation readings in four decades will likely lead to a series of interest rate hikes from the Federal Reserve, which will make it even harder for Americans to pay down their credit card debt," says Ted Rossman, a senior industry analyst at Bankrate.com.

How to deal with rising credit card debt costs

The average credit card currently charges about 16% in interest, but that could easily rise to over 17% by the end of the year, Rossman says. For consumers that owe a balance on their credit card, that will likely mean paying more in interest each month than they already are.

If that's you and your budget is already stretched to its limit, you might want to explore your other debt relief options before interest rates rise.

"My top tip is to sign up for a 0% balance transfer card — these offers last as long as 21 months," says Rossman. "Other good tactics include consolidating higher-cost debts into a low-rate personal loan, seeking nonprofit credit counseling and looking for ways to earn more and spend less."

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