Record High Credit Card Balances, Rising Delinquencies Point to Consumer Distress

November 7, 2023

Consumers are entering the Christmas shopping season laden with debt that they are already having trouble paying off, prompting analysts to wonder if the year’s retail sales will end on a sour note.

Americans now owe a collective $1.08 trillion on their credit cards, according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit. That is an all-time high and represents an increase of $154 billion, or 15%, from a year earlier, according to a separate report from the consumer credit firm TransUnion. That is the largest one-year increase since the New York Fed started keeping data in 1999.

The Fed report also showed that the rate of households becoming delinquent (30 days behind on payments) or entering serious delinquency (behind by 90 days or more) on their credit cards was the highest level since the end of 2011. The trend of climbing delinquency rates is expected to continue as we enter the holiday season, and it is typically at the end of the year when more consumers start to pay late.

Consumers are carrying higher balances on their cards as well. TransUnion’s analysis found that the average balance per consumer in the U.S. climbed to $6,088, the highest level in ten years. The cost of carrying a balance is increasing as well as interest rates continue to climb. The average credit card interest rate this week was 27.80%, compared to 22.77% this time last year.

The report serves as the latest piece of economic data that points to a consumer that is straining under persistently high inflation and surging interest rates, and, given that consumer spending accounts for roughly two-thirds of the nation’s GDP, economists are expecting an economic slowdown on the horizon.


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