Credit card delinquency rates hit worst level since 2012 in new Fed data | FOX Business
Americans are grappling with a rising tide of credit card debt, as revealed by recent data from the Federal Reserve Bank of Philadelphia. The report highlights a concerning trend: more people struggle to keep up with their credit card payments amid soaring inflation and interest rates. In the last quarter of 2023, all stages of credit card delinquency, including 30, 60, and 90 days past due, surged to their highest levels since 2012. This spike is often attributed to increased holiday spending, a common occurrence towards the end of the year.
The stress among cardholders is evident in their payment behavior, with a significant rise in the share of accounts making minimum payments. While there was a slight increase in the number of Americans paying off their credit card balance in full, the rise in revolving balances implies higher debt burdens for a smaller group of individuals who carry over their balances from month to month.
Adding to the financial strain is the record-high average credit card annual percentage rate (APR), currently holding steady at 20.75%. This marks the highest rate since records began in 1985, surpassing the previous record set in July 1991. High APRs mean that even small amounts of debt can balloon over time, leading to significantly higher consumer costs.
The surge in credit card delinquencies coincides with the Federal Reserve’s aggressive interest rate hike campaign to curb inflation and stabilize the economy. While inflation has moderated in recent months, it remains elevated compared to the previous year, putting pressure on households, especially low-income families, disproportionately affected by rising prices for essentials like food and rent………..
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Rising Dough
How might the current trend of rising credit card debt and delinquencies impact consumer spending habits and the broader economy in the coming years?
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The current trend of rising credit card debt and delinquencies negatively impact consumer spending habits and the broader economy in the coming years due to wrecking credit in the wrong way.
The current trend for rising the credit card debit delinquencies will impact the consumer spending habits because it will cause the spending to go down with the people not wanting to pay more for the delinquencies. The broader economy in the coming years will also decrease because more and more consumers will start spending less causing companies profit to go down along with the overall economy.
If people have more debt to pay off, they might be more cautious about spending and prioritize paying off their debts. This could lead to a decrease in consumer spending, which could have a ripple effect on businesses and the economy.