Nearly 3.5% of credit card balances were 30 days or longer past due at the end of December, the Philadelphia Fed said, the highest figure in its record going back to 2012, Bloomberg reports. “Stress among cardholders was further underscored in payment behavior, as the share of accounts making minimum payments rose 34 basis points to a series high,” the Philadelphia Fed said. The share of unpaid credit card balances 60 and 90 days late also climbed. Card balances and card usage also rose, with 10% of credit-card users having a balance in excess of $5,200. Twenty-five percent of active accounts have an outstanding balance above $2,000 for the first time.
In addition, the credit scores of cardholders in the 10th and 25th percentiles decreased to their lowest levels since the first quarter of 2020.
Banks and other credit card issuers have responded by lowering the credit lines for new accounts. The median account opened in the fourth quarter had a $3,000 limit, down from $3,368 in the second quarter.
Financially Stressed Out
For Americans who lacked savings prior to the pandemic, financial stress is rising as is their debt, according to a separate report from the New York Federal Reserve.
A combination of inflation, increased interest rates, and the end of pandemic-tied relief, such as the moratorium on student loan payments, has led to record credit card debt, experts say.
In the fourth quarter of 2023, Americans held $1.13 trillion on their credit cards, and aggregate household debt balances increased by $212 billion, a 1.2% rise, according to the latest data from the New York Fed.
Delinquencies are also on the rise. As of December, 3.1% of outstanding debt was in some stage of delinquency, up by 0.1 percentage point from the third quarter. The New York Fed’s report found that 6.4% of credit card debt was delinquent by 90 days or more, up from 4% in the last quarter of 2022. To read more click here.