Millennial credit card delinquencies rise: New York Fed

Dive Brief:

• The delinquency rate among millennial credit card holders has surpassed pre-pandemic levels, according to new data from the Federal Reserve Bank of New York’s Center For Microeconomic Data. But delinquency rates among baby boomers, Gen X and Gen Z credit card holders remain in line with pre-pandemic patterns.
• About 2.9% of millennials are newly delinquent as of the third quarter of this year, slightly up from 2.5% in Q3 2019, according to a New York Fed blog post.
• After categorizing credit card delinquencies across four groups of incomes from the highest to the lowest, the Center For Microeconomic Data found that delinquencies among the lowest income credit card holders rank the highest at 3.4%, but the remaining three quartiles all have credit card delinquencies exceeding pre-pandemic levels.

Dive Insight:

Credit card balances rose $48 billion in Q3 to $1.08 trillion. The third quarter of this year marked the eighth consecutive quarter of year-over-year credit card balance growth, the New York Fed said. 

In addition to income, the Center for Microeconomic Data also examined the impact of other household debt on credit card delinquencies. Consumers with auto and student debt had the highest rate of delinquencies in the third quarter at 3.7%, followed by consumers with only student debt (3.2%), auto loans (2.6%), credit card debt only (1.4%) and mortgage debt (1.2%).

“The labor market and the general economy have remained resilient throughout this period which makes pinning down the causes of rising delinquencies rates more difficult,” the researchers wrote in the blog post. “Apart from student loans, which were aided by administrative forbearance that only recently ended, new delinquencies for all loan types have risen since. Rising delinquencies were inevitable from historic lows, but it has been less clear how high and until when they might rise.”

The New York Fed has tracked rising credit card debt over the past year or so. In Q4 2022, consumer credit card balances rose 6.6% from the previous quarter to $986 billion. Though credit card debt remained the same in Q1 2023, consumers pushed their balances past the $1 trillion mark in the second quarter of this year, according to the Center for Microeconomic Data.