Both credit card debt and use are increasing. Perhaps those of us who are more vulnerable to financial problems are signaling it to the rest of us, especially when it comes to retail and auto loans.
According to statistics from VantageScore that was released this week, credit card delinquencies are rising compared to a year ago. The largest increase was seen in the subprime category, where delinquency rates rose by 20% on a yearly basis.
Delinquencies are getting worse. The overall delinquencies for the categories with balances between 30 and 59 days past due climbed from 0.2% in 2017 to 0.6% in April (the most recent data available), per VantageScore figures. In April, balances reached $5,457, up 5.6% from the previous month.
The 30- to 59-day default rate for loans overall was 1.88% in April, up from 1.6% in March and higher than 1.5% last year. If we focus more specifically on auto loans. Given that the balance-to-loan ratio was 64%, there is still a sizable amount of debt to be paid off.
The Federal Reserve came to the conclusion that a higher percentage of current debt was becoming past due after reviewing the most recent data on household credit and debt. Delinquencies on credit card debt and auto loans increased by 0.6 percentage points and 0.2 percentage points, respectively, “approaching or surpassing their pre-pandemic levels,” according to a study from the Fed.