Credit Card Delinquencies Rise Among Young Adults

Credit-card delinquency rates are rising, particularly among young people who are now more likely to have a credit card than a decade ago.

Millennial and Gen Z Americans, many raised during the depths of the Great Recession, have been wary of Wall Street products and act more thrifty than their parents’ generations. However recent research from the New York Federal Reserve reveals an alarming trend: Rising credit card delinquencies among these younger consumer classes.

About 8.1% of credit-card balances held by people aged 18 to 29 were delinquent by 90 days or more in the first quarter of the year, the highest share since the first quarter of 2011, the bank said. Delinquency rates among older people are slowly rising as well, but remain below the rate for the youngest borrowers.

But, that’s not a sign for alarm yet, according to a posting on the Federal Reserve Bank of New York’s Liberty Street Economics Blog. The share of borrowers who are 90+ days delinquent on their credit card balances is still below pre-recession levels.

“The rate at which credit card balances become delinquent has been rising, and that has coincided with an increase in younger borrowers entering the credit card market,” stated the New York Fed researchers.  “However, these delinquency rates are increasing from historically low levels and remain below pre-financial-crisis levels.”

The move into serious delinquency rates for credit cards is a fairly new occurrence. It’s been rising since only 2017 whereas payments on auto loans that were at least 90 days late have trended upwards since 2012.

Source: Bloomberg/CNBC/Wall Street Journal/Federal Reserve Bank of New York