The Philadelphia Fed reported that nearly 3.5% of credit card balances were overdue by at least 30 days as of the end of December, marking the highest level in the data series dating back to 2012. This figure increased by approximately 30 basis points from the previous quarter. Additionally, the proportion of debts that were 60 and 90 days late also saw an increase.
The report highlighted the stress among cardholders, noting that the share of accounts making minimum payments rose by 34 basis points to reach a series high.
Nominal credit card balances reached a new series high, and card utilization also increased as consumers extended their credit lines further. However, inflation-adjusted credit card balances remained below the levels seen in the fourth quarter of 2019.
These numbers indicate added pressure on U.S. household finances due to the higher cost of living. Approximately 10% of credit card borrowers now carry an account balance exceeding $5,200, according to the Philadelphia Fed, and one-quarter of active accounts have a balance of over $2,000 for the first time.
Despite this, around one-third of cardholders pay their balance in full every month, highlighting a disparity among consumers.
The Philadelphia Fed also found that credit scores at the 10th and 25th percentiles of cardholders decreased to their lowest levels since the first quarter of 2020, suggesting that further deterioration in performance could be on the horizon.
In response to these trends, issuers have been reducing the credit limits for new accounts. The median account opened with a $3,000 limit in the fourth quarter, down from a high of $3,368 in the second quarter.
The data series, which began in the third quarter of 2012, covers loans from large lenders with at least $100 billion in assets, representing approximately four-fifths of total bank card balances.
