New York Fed says credit card delinquency rates surge to pre-pandemic levels

American Express card used to buy things

American Express card used to buy things
photo: Joe Reddell (Getty Images)

A Report from the Federal Reserve Bank of New York Data released Tuesday showed that the share of the nation's credit card debt held by borrowers who have maxed out their credit cards is approaching pre-COVID-19 levels. What's more, delinquency rates among borrowers who have borrowed more than they have are much higher than they were before the pandemic.

The Federal Reserve Bank of New York considers General household debt Americans were found to owe a total of $17.7 trillion in consumer loans, student loans and mortgages. Among them, seriously delinquent loans or loans that are 90 days overdue climbed to 1.54% from 1.08% at the end of last year.But within That Data points show the serious delinquency rate has climbed from 4.57% to 6.86%.

“Severe delinquency rates for credit cards and auto loans continued to rise across all age groups in the first quarter of 2024,” Joelle Scally, regional economic director for the Household and Public Policy Research Department at the Federal Reserve Bank of New York, said in comments accompanying the numbers. “An increasing number of borrowers are missing credit card payments, indicating worsening financial distress for some households.”

Gen Z and Millennial borrowers, as well as low-income borrowers, tend to have higher credit card utilization rates. The higher the utilization rate, the more likely it is that the borrower will eventually default on the loan. Nearly a third of people with balances above 90% of their credit limit fell behind on their payments last year.

“The share of fully-maximized borrowers has been increasing from the pandemic lows and is approaching pre-pandemic levels, and the delinquency conversion rate of these fully-maximized borrowers is now significantly higher than pre-pandemic, resulting in higher conversion rates for credit cards overall. delinquency rates,” the New York Fed noted. “To actively improve credit card delinquency, we need to see the delinquency transition rate of delinquent borrowers begin to decline and/or the share of borrowers who are depleted of funds decline. So far, the data shows that neither trend is moving in the direction of delinquency. develop in the right direction.

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