Credit card debt rose to $930 billion in Q4 2019, higher than the previous peak just before the financial crisis in 2008, reports the Federal Reserve Bank of New York. Serious delinquencies rose, too, up to 5.32% from 5.11% in just one quarter.
Total household debt continues to rise in the U.S., increasing to $14.15 trillion according to the Federal Reserve Bank of New York’s Center for Microeconomic Data in its most recent Quarterly Report on Household Debt and Credit. This troubling trend marks the 22nd consecutive quarter with increased household debt, and includes housing, mortgage, auto loans, credit cards and student loans, and is $1.5 trillion higher than the prerecession peak of $12.68 trillion, set in the third quarter of 2008.
Credit card debt has also hit a record high, increasing in the last quarter of 2019 by $46 billion to $930 billion. Unfortunately, that’s accompanied by increased delinquency.
Accounts flowing into serious delinquency—at least 90 days late—sharply increased from 5.11 percent in Q3 2019 to 5.32 percent in Q4 2019. The NY Fed also noted a small increase of bankruptcies over the same period in 2018.
“There are increases in the credit card delinquency rate that make you wonder whether some parts of the population are not doing as well, or whether this is just a result of more relaxed lending standards,” said Wilbert van der Klaauw, senior vice president at the New York Fed. “It’s something we are looking into,” he told PYMNTS.com.
Same story, new data
Readers who have been following our credit risk blogs and reports will be familiar with this upward trend. We’ve gathered our findings into an Ebook to help lenders make sense of how we got here, and how to predict serious delinquency before it occurs.
In Assess today’s credit risk and prevent tomorrow’s delinquency: a concise guide, we break down the various types of loans, analyzing not just debt, but the cost of collections, charge-offs and customer retention.
If lenders are to protect their portfolios and shareholder value, they need to predict and prevent delinquency before it happens.
We also offer proactive solutions for credit risk management, helping lenders identify potential problems before they happen. Payment programs and reward systems (such as cash back bonuses) help, but they can’t foresee the future.
Artificial intelligence (AI) researchers are developing new solutions for many applications. Our Ebook discusses how to use your data to determine which accounts are at risk of becoming seriously delinquent.
Download our Ebook Assess today’s credit risk and prevent tomorrow’s delinquency: a concise guide. You will also receive links to out our many resources, a demo and videos on credit risk.