Diving certificate:
- Credit card debt rose $27 billion in the second quarter, increasing household debt by 2.4 percent to $1.14 trillion from the first quarter, according to a new quarterly report. from the Center for Microeconomic Data at the Federal Reserve Bank of New YorkCredit card debt increased 10.8% compared to the same quarter last year.
- The percentage of credit card accounts that were “severely delinquent,” meaning they were 90 days or more past due, rose to 7.18% in the second quarter, compared to 5.08% in the same quarter last year, the New York Fed said in a press release on Tuesday about the report. About 9.1% of card balances went delinquent last year, after rising steadily since the first quarter of 2022, the report said.
- At the same time, cumulative credit card limits increased by 1.4 percent, or about $69 billion, in the second quarter compared to the first quarter, the report said.
Diving insight:
Compared to other types of debt, consumers are falling behind on their credit card debt at an increasing rate. The percentage of balances over 90 days past due was highest for credit card debt, followed by auto loans, student loans, mortgages and home equity loans, according to the New York Fed’s second-quarter report.
“Severe delinquencies” hit younger cardholders particularly hard. Credit card borrowers ages 18 to 29 lead the way in severe delinquencies, followed by borrowers ages 30 to 39 and then the 40 to 49 age group, the New York Fed report said.
In a phone call with journalists, researchers at the New York Fed noted that the delinquency rate among borrowers aged 30 to 39 has exceeded levels seen before the outbreak of the COVID-19 pandemic in the United States in early 2020. As for the factors that might cause this group to fall behind on their credit card payments, the researchers speculated that this group may have been hit particularly hard by the pandemic. Rising housing costs could be another factor, they noted.
“If they are more likely to be renters, they may be more exposed to rent increases, which could put a bit more of a dent in their wallets, than older borrowers who may benefit from homeownership and stable housing payments,” a New York Fed researcher said during the conference call.
The Center for Microeconomic Data study builds on other reports that indicate that credit card debt continues to weigh on consumers’ wallets. The rise in credit card delinquencies Starting 2022 and exceeded pre-pandemic levels in the third quarter, particularly in low-income communities, according to previous New York Fed research.
The Fed’s latest report suggests that credit card balances in the US have continued to rise since the end of 2023. In the fourth quarter of last year, US consumers’ credit card balances were rose by 4.6% The New York Fed noted that the total value of securities increased by $1.13 trillion compared to the previous quarter.
