Six-figure earners are getting nervous about falling behind on their bills

Households earning at least $100,000 are increasingly concerned about their ability to make minimum debt payments, according to a recent survey. The New York Federal Reserve's Survey of Consumer Expectations shows that it's been a decade since these higher-income households have been this worried about their debt.

Overall, 14% of consumers reported they may miss a minimum debt payment within the next three months. This is the highest rate since April 2020, when 16% anticipated missed payments during the peak of pandemic-related layoffs. It also marks the fourth consecutive month of rising expected delinquencies, according to the NY Fed's report.

Among households earning $100,000 or more, 8.4% indicated they might miss a payment, a sharp increase from 6.4% the previous month. This represents the largest monthly jump in anticipated delinquencies across all income groups. The last time households in this income bracket were this concerned about debt payments was in September 2014.

Although consumer expectations for inflation and the job market remain relatively stable for the coming year, these findings highlight that even as inflation cools from its four-decade high in 2022, many households are feeling financial pressure.

High-income households appear to be seeking assistance managing their debt. According to Thomas Nitzsche, spokesperson for the nonprofit credit counselor Money Management International, there's been a 74% increase in new clients with annual incomes over $100,000 compared to the previous year. He noted that these six-figure earners are now a "growing demographic" for credit counseling, reflecting a shift from traditionally lower- to middle-income clients.

One reason for this trend may be that higher earners often qualify for larger credit card limits, which can lead to deeper debt if they struggle with rising costs. "When their budgets tighten, they can become over-extended more easily," Nitzsche explained, whereas lower-income households don't have access to as much credit.

Seriously delinquent credit card debt reached a 13-year high in the NY Fed's August debt report. Although it doesn't break down delinquencies by income level, other indicators show that financial strain is affecting wealthier households. For example, 1% of car loans for households earning $150,000 or more were one to two months overdue in August, a rate that has been climbing since spring. Similarly, credit card delinquencies for this group have returned to April 2020 levels, with 0.35% of credit card balances past due.

The survey's release coincides with corporate earnings reports that also offer insight into Americans' financial health. For instance, Bank of America reported setting aside funds for uncollected loan payments at levels higher than the previous year, signaling concerns about growing financial strain.

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