In This Story
Overdue credit card bills are the highest they’ve been since the Federal Reserve Bank of Philadelphia started keeping track in 2012.
The proportion of card balances that were more than 60 days past due, making them delinquent, topped 2.5% in the first three months of the year, according to a report published Wednesday. That’s more than double the lows seen in the third quarter of 2021, as pandemic-era federal stimulus money helped borrowers pay off their balances in full.
While the number of total credit cards dipped (in line with seasonal trends), total revolving balances — the amount of money owed on a credit card — reached a record $628.6 billion this quarter, the Philadelphia Fed said. That brought revolved balances as a share of total outstanding balances to more than 71%, its highest level since 2021.
Consumers are returning to higher, pre-pandemic level delinquency rates, as interest rates continue to sit at more than two-decade highs and inflation weighs on bank balances. During and in the immediate aftermath of the pandemic, consumers were largely kept afloat by stimulus and decreased spending on restaurants and travel. This resulted in excess savings, which kept consumers going strong for the past few years. But those savings are dwindling.
Visa reported third-quarter earnings Tuesday, with revenue growth falling short of Wall Street’s expectations in a surprise show of weakened consumer spending. Chris Suh, Visa’s chief financial officer, said in a call with analysts that the company saw moderation in its lower-spending consumer segment.
For their part, banks are also bracing for more credit card delinquencies and other risks from lending in the second half of the year. In the second quarter, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo all raised their provisions for credit losses from the prior quarter. Those provisions are the money that financial institutions set aside to cover any potential losses from credit risk, including delinquent or bad debt and lending.