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Americans' credit card balances climbed to $1.26 trillion in the second quarter, nearing last year's record high as household finances remain divided.

The Federal Reserve Bank of New York released its quarterly household debt report Tuesday, showing credit card balances increased by $21 billion, or 1.7%, from the previous quarter. The total is now close to last year's all-time high of $1.28 trillion.

The percentage of credit card balances in late-stage delinquency, or more than 90 days past due, stood at 12.8% in the first quarter, up from 7.6% in the third quarter of 2022, according to New York Fed researchers.

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"This is a lagging indicator and reflects past charge-off debts that are sticking around on credit reports," the researchers said during a Tuesday press call.

New credit card delinquencies have held steady, although they "remain at elevated levels, a trend we'll continue to monitor." About 6.97% of balances transitioned into delinquency over the past year.

About 175 million Americans hold credit cards, and roughly 60% carry revolving debt rather than paying their balances in full each month.

Credit card delinquencies had climbed to 13.1% in the first quarter, the highest level since 2010.

The New York Fed researchers connected the credit card data to the broader divide between households.

"To us it reflects this K-shaped economy," the researchers said, according to a CNBC report. "There are a lot of households that live paycheck to paycheck."

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The latest figures come as Treasury Secretary Scott Bessent has argued that the K-shaped economy is over, saying lower-income workers are beginning to regain ground. Bessent pointed to faster wage growth among lower-paid workers as evidence that the divide is narrowing.

Earlier research from the Urban Institute found that more than one-quarter of working-age adults who used credit cards to buy groceries either could not pay their balance in full or missed the minimum payment. About one in 10 adults used buy now, pay later loans for groceries, while roughly 20% said they had used long-term savings, including emergency funds, to pay for groceries.

Grocery prices have climbed 32% over the past five years, according to the Urban Institute research.

The pressure has also appeared in broader household borrowing.

"The rise in credit card debt, HELOC debt and other debts, which include personal loans, clearly show that people are looking for ways to extend their budget in the face of stubborn inflation," Matt Schulz, chief credit analyst at LendingTree, said.

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A separate Achieve survey found that 55% of consumers carry credit card balances to cover essential expenses. Among 2,000 consumers surveyed in June, 56% of borrowers said it would take six months or longer to pay off all their credit card debt.

"Short-term debts often start off as a temporary stop-gap solution to household budget gaps," Brad Stroh, Achieve's co-founder and co-CEO, said. "With elevated costs of living and compounding interest charges, these debts can quickly create sustained pressure on household balance sheets and budgets."

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