Credit card delinquencies surge as Americans battle high inflation, interest rates
Portfolio Wealth Advisors President and CIO Lee Munson discusses the expected release of big bank earnings, the Fed's rate cuts and shares his market outlook for the year.
A growing number of Americans are falling behind on their monthly credit card payments as they continue to battle high inflation and interest rates, according to new data published by the Federal Reserve Bank of Philadelphia.
All stages of credit card delinquency – 30, 60 and 90 days past due – rose during the third quarter of 2023, surpassing pre-pandemic levels for the first time. Delinquency rates are now approaching the highest level since 2012, the findings indicate.
The researchers found that 2.21% of credit card balances were 60 days late during the three-month period from July to September, up from 1.93% during the same period in 2019. At the same time, 3.19% of credit card balances were 30 days late, while 1.52% were in serious delinquency of 90 days or more.
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Visa Inc. credit and debit cards are seen in Washington, D.C., on April 22, 2019. (Photographer: Andrew Harrer/Bloomberg via Getty Images / Getty Images)
«Greater consumer fragility is also evident in payment behavior, with a growing share of consumers revolving all or some portion of their cycle end balance,» the researchers wrote in the report.
As a result of the spike in delinquencies, banks are granting fewer credit line increases and reducing credit lines more frequently.
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The rise in credit card usage and debt is particularly concerning because interest rates are astronomically high right now. The average credit card annual percentage rate, or APR, hit
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