Interesting information from Seeking Alpha

Credit Card Data

Credit Card balances topped the $1 trillion record in Q2 as consumers continued to spend, according to the New York Fed’s Quarterly Report on Household Debt and Credit. The number of credit card accounts also increased by 5.48M to 578.35M, while the total limits on credit card accounts rose by $9B to a total of $4.6T.

High inflation is pushing more consumers to put non-discretionary spending on cards, while others may be having a harder time paring back their lifestyles despite the price pressures. Interest rates are compounding the issue, with the average annual percentage rate over 20%, making it a costly debt for consumers. It’s also higher than at any point since the Fed started tracking card APRs in 1994, contributing to the overall U.S. household debt that topped $17T in Q1.

Delinquency Trend

Meanwhile, the flow into serious delinquency (that is, 90 days or more delinquent) for credit cards rose to 5.08% of total credit card balances in Q2, from 3.35% in Q1. However, that figure is “normalized” with pre-COVID levels, as during the pandemic, changes in buying patterns, fiscal stimulus, and forbearance programs kept delinquency rates low. Credit card issuers will also report their July delinquency and net charge-off rates next week to get a better view on the industry.

“Despite the many headwinds American consumers have faced over the last year – higher interest rates, post-pandemic inflationary pressures, and the recent banking failures – there is little evidence of widespread financial distress for consumers,” New York Fed economists and researchers wrote following the release.

Seeking Alpha Commentary

“Non-revolving credit, such as personal loans and vehicle loans, has [seen] a slowdown over recent months,” added ING Economic and Financial Analysis. “Moreover, the latest Federal Reserve Senior Loan Officer Opinion Survey showed banks increasingly unwilling to make consumer loans.”