Sunday, February 25, 2024
HomePersonal FinanceCredit card balances jump 10% to a record $6,360 as delinquencies rise...

Credit card balances jump 10% to a record $6,360 as delinquencies rise | Black Kite Express

Credit card debt has notched another new high.

Americans now owe $1.13 trillion on their credit cards, the Federal Reserve Bank of New York reported Tuesday.

Balances jumped 10% from a year ago, according to a separate quarterly credit industry insights report from TransUnion, with the average balance per consumer hitting $6,360, also a historic record.

“Consumers are just spending more,” said Charlie Wise, senior vice president of global research and consulting at TransUnion. “Even though the inflation rate is down, that doesn’t mean prices are coming down.”

Prices are still rising, albeit at a slower pace than they had been.

The consumer price index — a key inflation barometer — has fallen gradually from a 9.1% pandemic-era peak in June 2022 to 3.4% in December 2023.

Meanwhile, households continue to show signs of strain — more cardholders are carrying debt from month to month or falling behind on payments.

Credit card delinquency rates jumped across the board, the New York Fed and TransUnion found. Credit card delinquencies surged more than 50% in 2023, the New York Fed reported. According to TransUnion’s research, “serious delinquencies,” or those 90 days or more past due, reached the highest level since 2009.

“Consumers are struggling with their payments,” Wise said. “I think we will continue to see those delinquencies tick up.”

More from Personal Finance:
Credit card debt hits a ‘staggering’ $1.13 trillion
Americans can’t pay an unexpected $1,000 expense
Why workers’ raises are smaller in 2024

‘It’s not all bad news’

Millennials increasingly lean on credit

Still, consumers often turn to credit cards, in part because they are more accessible than other types of loans.

Overall, an additional 20.1 million new credit accounts were opened in the fourth quarter of 2023, boosted in part by subprime borrowers looking for additional liquidity, according to Wise. Subprime generally refers to those with a credit score of 600 or below, according to TransUnion.

Many people in this group are millennials, he said, who are burdened by high levels of student loan debt and the housing affordability crisis.

“If you can’t afford to buy and your rent keeps going up, that’s not a very happy set of circumstances,” Wise said.

How to tackle credit card debt

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments