Both the overall level of household debt and the share of those that struggled to make timely payments increased last quarter.
Many Americans financed their summer of spending with credit cards and a rising number are struggling to pay those debts.
“Credit card balances experienced a large jump in the third quarter, consistent with strong consumer spending and real GDP growth,” said Donghoon Lee, an economic research advisor at the New York Fed. Across the board, about 3% of Americans’ outstanding debt was in some stage of delinquency at the end of September, according to the bank’s research. That is a 0.4 percentage point increase from the second quarter, but the figure is still 1.7 percentage points lower than at the end of 2019, prior to the Covid-19 pandemic.
Setting aside student loans, delinquency rates have been on the rise from their historic lows since mid-2021. The share of credit-card and auto-loan debt that is overdue has already surpassed prepandemic levels. Approximately 8% of credit-card balances and 7.4% of auto loan balances transitioned into delinquency on an annualized basis by the end of the third quarter.
The researchers also examined delinquency rates by zip codes, finding that the lowest-income areas do persistently have the highest delinquency rates. That said, delinquency rates across all incomes are above their 2019 averages.
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