Credit Card Balances, Delinquencies Grow as Consumers Struggle

May 14, 2024

Americans slowed their use of credit cards in the first quarter of 2024 as the total level of debt fell, but for those who carry a balance on their cards, the balances are growing quickly and borrowers are having trouble keeping up with payments.

Americans now owe $1.12 trillion on their credit cards, according to a report from the Federal Reserve Bank of New York. That’s down slightly from the $1.13 owed in the fourth quarter of last year, but up 13% from the same period last year.

Additionally, the average balance per customer stands at $6,218, according to a separate report from TransUnion. That’s an increase of 8.5% year over year.

Higher prices and high interest rates are stretching many household budgets, causing many to rely more on credit cards to maintain spending. 

As a result, credit card delinquency rates are climbing, researchers at both the New York Fed and TransUnion found. The New York Fed found that over the last year, roughly 8.9% of credit card accounts transitioned into delinquency. TransUnion’s research found that the number of “serious delinquencies,” meaning more than 90 days past due, grew to the highest level since 2010, when the economy was still in the midst of the Great Recession.

The New York Fed also found that the rise in delinquencies was highest among younger borrowers between the ages of 18 and 29.

Higher prices from persistent inflation are causing more people to turn to credit cards, and high interest rates mean they are having trouble paying them off.

The average credit card charges an interest rate of 20.66%, according to Bankrate. That’s almost an all-time high. At that interest rate, making minimum payments on the national average balance of $6,218 would take nearly 18 years to pay off and result in more than $9,200 in interest payments.

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