Credit card delinquencies surge, almost 1 in 5 users maxed-out: Research

Credit card delinquencies are on the rise, with research from the New York Federal Reserve showing nearly one-fifth of borrowers are “maxed out.”

According to a new report: Published by According to the bank’s Microeconomic Data Center, household debt rose by 1.1%, or $184 billion, in the first quarter of this year, to a total of $17.69 trillion.

“In the first quarter of 2024, rates of credit card and auto loan transitions into serious delinquency continue to rise across all age groups,” Joel Scully, head of regional economics in the bank’s household and public policy research division, said in a statement. I did,” he said.

“The number of borrowers who are behind on their credit card payments is increasing, and it is clear that financial hardship is worsening for some households,” Scully added.

Total national credit card utilization in the first quarter was 23%, the same as in previous quarters. However, a closer look at what’s behind these numbers reveals some clear differences in usage rates.

Almost half of borrowers “used less than 20 percent of their available credit in the first quarter.” Report breakdown It said 18% of borrowers had used “at least 90% of their available credit.”the latter group dubbed “Borrower who has reached the limit”

Before the coronavirus pandemic struck, less than a quarter of annual past due balances were associated with these borrowers, according to the report. By comparison, about a third of balances were delinquent last year.

It also found that younger borrowers and card users living in “low-income areas” were more likely to be maxed out.

The study found that gross delinquency rates rose in the first quarter, with “3.2% of outstanding debts at the end of March in some stage of delinquency.”

“Delinquency transition rates increased across all types of debt. On an annualized basis, approximately 8.9% of credit card balances and 7.9% of auto loans fell into delinquency,” a release detailing the report said. Are listed. “Mortgage delinquency transition rates increased by 0.3 percentage points, but remain low by historical standards.”