Credit card delinquency rate for young adults is rising
Signs of economic stress are flaring up for young adults, write the authors of a new report from Moody's Investors Service.
Why it matters: High inflation was already hurting younger folks, who have less wealth and lower savings and earnings. Now as credit starts to tighten, things could be more painful.
Driving the news: Credit card delinquencies are ticking up across the board, but especially for those ages 18-39, according to newly released data from the New York Fed.
- The delinquency rates on credit cards for those ages 18-29 was 8.3% in the first quarter, compared to 5.1% a year ago (but still lower than pre-pandemic).
- For those ages 30-39 the number was 6.27%, slightly higher than before COVID.
- For those age 40 and up, delinquency rate is around 5% or less.
Zoom in: Younger consumers "have been piling on debt" this year, write the authors of the Moody's report.
- Younger borrowers saw the fastest growth last year in both credit card and auto loan balances, per the NY Fed data.
- "The tightening of lending standards will hit this particular cohort the hardest," said Claire Li, senior analyst at Moody's.
What we're watching: Student loans. The Biden administration said it's lifting the pause on payments no later than June 30. That could mean more financial stress for these borrowers, who haven't had to make a loan payment in years.