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Credit card delinquencies surge as mounting debt crushes Americans


Daily Caller News Foundation

Serious credit card delinquencies surged for another quarter as record levels of debt continue to weigh on struggling Americans, according to the Federal Reserve Bank of New York.

Delinquencies of 90 or more days for credit card debt rose to 6.36% in the fourth quarter of 2023, up from 4.01% from one year ago, according to data from the New York Fed. Americans accumulated $50 billion more in credit card debt in the fourth quarter of 2023, bringing the total to $1.13 trillion as Americans turn to credit to fund everyday purchases.

“Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” Wilbert van der Klaauw, economic research advisor at the New York Fed, said in the press release. “This signals increased financial stress, especially among younger and lower-income households.”

Total debt for households increased by $212 billion in the fourth quarter and $604 billion for the year, reaching $17.5 trillion, according to the New York Fed. Mortgage debt had the biggest increase, rising to $12.25 trillion for the quarter after a $112 billion increase.

Auto loans also had a significant uptick in serious delinquencies, rising to 2.66% from 2.22%. Auto loan debt rose $12 billion in the quarter and $55 billion in the year to $1.6 trillion, according to the New York Fed.

Delinquency transition rates increased for all types of debt except for student loans, indicating more possible gains in delinquencies in the coming year, according to the New York Fed. Around 8.5% of credit card balances and 7.7% of auto loans were transitioned to delinquency in the quarter.

Borrowers are also facing increased pressure and costs due to a rise in interest rates from an increase in the federal funds rate. The federal funds rate was placed at a range of 5.25% and 5.50% by the Federal Reserve in an effort to bring down high inflation, which peaked at 9.1% in June 2022, far above the Fed’s 2% target.

Americans resorted to financing options in the fourth quarter of 2023, including buy now and pay later programs and layaway plans to fund purchases. High inflation and a shortening of the work week continue to harm worker wages, leading to less disposable income and a greater need for debt.

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Republished with permission from Daily Caller News Foundation

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