From Business Insider:
After falling in the last few years as borrowers paid down their balances, US credit card debt rose $38 billion between July and September of this year, per the New York Fed. The 15% year-over-year increase was the largest in over 20 years.
For now, credit card debt remain below pre-pandemic levels, and to some degree, an uptick was to be expected as consumers emerged from lockdowns and contended with higher prices.
The “real test,” however, New York Fed researchers wrote in a November blog post, is “whether these borrowers will be able to continue to make the payments on their credit cards.” Signs point to Gen Z, in particular, is starting to feel the squeeze.
While overall delinquencies remain below pre-pandemic levels, the percent of credit card payments 90 days or more past due rose to 3.7% in the third quarter, up from 3.2% the year prior.
While all age groups saw upticks in missed payments, the biggest increase came from 18 to 29-year-olds, whose 90-plus day delinquency rate rose to over 6%, though still below the roughly 9% rate before the pandemic took hold.
It’s not just credit card debt that young borrowers are struggling to make payments on either. Rising balances for auto loans also coincided with a spike in the auto delinquency rate.
“Is this simply a reversion to earlier levels,” the researchers wrote of the overall rise in missed payments, “with forbearances ending and stimulus savings drying up, or is this a sign of trouble ahead?”