Aug 15, 2023 - Economy

Credit card delinquencies jump past pre-pandemic levels

Data: New York Fed Consumer Credit Panel/Equifax; Chart: Axios Visuals
Data: New York Fed Consumer Credit Panel/Equifax; Chart: Axios Visuals

More Americans are falling behind on their credit card payments.

Driving the news: The rate of new credit card delinquencies has surpassed its pre-COVID level, clocking in at 7.2% in the second quarter, per a report out this month from the New York Fed.

  • Auto loan delinquencies were at 7.3% in Q2, also higher than pre-pandemic levels.
  • Meanwhile, mortgage delinquencies remain very low.

Why it matters: Even as inflation declines, Americans are increasingly relying on credit cards to make their budgets work — or maintain their "levels of consumption," as Moody's Investors Service put it in a note out last week.

  • And higher interest rates on credit cards push balances up higher.

Stunning stat: Credit card balances rose by $45 billion in the second quarter, rising past $1 trillion for the first time in the NY Fed survey's history.

Zoom out: Returning to pre-COVID delinquency levels isn't something to stress over at the moment  delinquency rates on credit cards before 2020 were relatively low thanks to the strong job market.

What to watch: Millions of Americans will soon have to start making student loan payments again, and undoubtedly some will rely more on credit cards to maintain their spending levels. That could potentially drive these delinquency rates higher.

Go deeper