Credit Card Delinquencies Climb to Highest Rate Since 2011, New York Fed Data Show
The share of credit card balances at least 90 days past due rose again last quarter, concentrated among borrowers who took on debt during the low-rate years and are now paying it down at double-digit rates.
WASHINGTON — The share of credit card debt that is seriously delinquent — 90 days or more past due — rose again in the second quarter, reaching its highest level since 2011, according to the Federal Reserve Bank of New York’s latest household debt and credit report.
Total household debt climbed to a fresh record, driven primarily by credit card balances and auto loans rather than mortgages, which have stayed comparatively flat as elevated rates continue to discourage both new home purchases and refinancing.
The delinquency increase is not evenly distributed. The report shows the deterioration concentrated among borrowers in their thirties, a cohort that took on a disproportionate share of card debt during the near-zero-rate years and is now servicing that debt at interest rates that in many cases have roughly doubled since origination.
That combination — debt taken on when carrying it was cheap, now being carried at a materially higher cost — is the mechanical story behind the headline number. It is less a story about people spending beyond their means at a single point in time than about a rate environment shifting underneath debt that was already on the books.
The report lands alongside this month’s labor-market data showing nonfarm payrolls contracting in July, and the two series read naturally together. Rising delinquencies are typically a lagging consequence of labor-market weakness: household finances erode gradually as income growth slows or employment becomes less secure, and the credit data confirms the deterioration only after it has been under way for months.
For card issuers, the relevant question is how much of the increase is already priced into loss provisions built over the past two years, and how much represents a fresh deterioration beyond what models assumed. Issuers that lean heavily on subprime and near-prime cardholders are more exposed to the age-30-to-39 cohort the report highlights, and are likely to face the sharpest questions from investors when quarterly results are reported.
The New York Fed report is compiled from the Equifax-based Consumer Credit Panel and is published quarterly. It does not include income data, which limits its ability to say whether rising delinquency reflects falling income, rising required payments, or some combination of the two — a gap the report’s authors have acknowledged in prior releases.