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Research and Statistics

Card balances swell, but consumers manage their debts well

New Fed data show serious delinquencies keep falling as card debt reaches $870 billion

Summary

U.S. credit card balances entered new territory in the last quarter of 2018, according to the Federal Reserve Bank of New York, surpassing for the first time the peak they set during the financial crisis.

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U.S. credit card balances entered new territory in the last quarter of 2018, according to the Federal Reserve Bank of New York, surpassing for the first time the peak they set during the financial crisis. But while balances are climbing, the share of cardholders falling far behind in their payments is not only holding relatively steady — it sits near 15-year lows.

In the latest installment of the New York Fed’s “Quarterly Report on Household Debt and Credit”, card balances across U.S. households rose to $870 billion. That sets a new record, having edged higher than the $866 billion balance Americans held in the last quarter of 2008, at the height of the Great Recession.

Yet, serious credit card delinquencies have declined considerably since the aftermath of the financial crisis, and are hovering at low levels. Having peaked at 13.7 percent in mid-2010, delinquencies of 90 or more days have ranged between just 7.1 and 8 percent for three years now.

See related:  Fed: Card balances jumped by $2.5 billion in January

The latest 90-plus day delinquency reading on credit cards comes in at 7.8 percent, a decline from 7.9 percent the previous quarter.

In the years surrounding the financial crisis, the serious delinquency rate tended to track the change in balances with a couple of years’ lag. But the relationship between the two measures has changed in recent years. While today’s balances have been trending upward since their early 2014 low of $659 billion, 90-plus day delinquency rates have fallen or held relatively steady for more than eight years now.

The New York Fed’s report is based on data from the Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data. The latest quarterly results were released Feb. 12.

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Published: March 19, 2019

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