Credit card debt just broke 1T

[cashnocredit]

Credit card balances jumped in the second quarter and are above $1 trillion for the first time (cnbc.com)

 

• Total credit card indebtedness increased by $45 billion in the April-through-June period, a rise of more than 4% and just above $1 trillion.
• The Fed’s measure of credit card debt 30 or more days late rose to 7.2% in the second quarter, the highest rate since the first quarter of 2012.

[hegemony]

I saw that headline and can already hear people using it to drum-up clicks and views. Sad thing is when you adjust for inflation as well as for more people with credit (i.e., per capita balances) this is a nothing burger.

[cashnocredit]

1 hour ago, hegemony said:

I saw that headline and can already hear people using it to drum-up clicks and views. Sad thing is when you adjust for inflation as well as for more people with credit (i.e., per capita balances) this is a nothing burger.

Agree re the 1T$ CC debt. It's a click generator. I'm more concerned with the 7.2% of CC debt being >30 days late. And it's higher than in anytime in the last 10 years. There's a dynamic process where during Covid and the govt. cash payouts, CC debt declined. That's now so long ago. The accelerated rate of CC spending seems like people making up for lost time at the cost of their financial stability. And easy to do with inflation kicking in. This data is only through Q2. Concerning.

[MP80]

Yes, I read the news a few days ago that accrued debts are climbing and it's not surprising.

 

Not long ago, its credit card debt surpassed $800 billion, and then the pandemic hit, and almost every industry except tech collapsed. People are scrambling just to keep covering the roof and putting food on the table to stay alive. If you're unemployed and have no other income, it's easy to use $30K to $50K on credit cards.

[hdporter]

3 hours ago, cashnocredit said:

I'm more concerned with the 7.2% of CC debt being >30 days late. And it's higher than in anytime in the last 10 years

 

I grasp that NBC and others are reporting this stat.  But it feels entirely spurious to me; I haven't been able to put my hands on a Fed report that sources this number and it seems at odds with other delinquency status for 2nd quarter.

 

I haven't found the data from which to claim that this stat is misleading.  But my gut suggests that the 7.2% represents the change in delinquent balances from 1st quarter.  Given that outstanding credit card balances swelled by about 4%, we could be talking a delinquency rate of just 3% or 4% (but, of course, there's no way of telling from this stat if it represents what I speculate it does).

 

I detest reporters who strew stats around without no idea of what they really represent.

 

 

[Knight]

Can't blame me, I own $0 of that balance. 

[8ball]

I asked perplexity what the current default rate is-

According to the Federal Reserve Bank of St. Louis, the delinquency rate on credit card loans for all commercial banks in the first quarter of 2023 was 2.43% . This is a slight increase from the previous quarter, which was 2.25% 

1

. However, it is important to note that delinquency rates can vary by state and age group. For example, the delinquency rate on credit cards for those ages 18-29 was 8.3% in the first quarter of 2023, compared to 5.1% a year ago

3

. Additionally, according to Citi's presentation on its earnings, the current delinquency rates are 2.8% for branded cards and 4% for retail services

4

. It is expected that delinquency rates will return to "normal" levels of 3% to 3.5% for branded cards and 5% to 5.5% for retail services by early 2024

4

.

 

[cashnocredit]

11 hours ago, hdporter said:

I grasp that NBC and others are reporting this stat.  But it feels entirely spurious to me; I haven't been able to put my hands on a Fed report that sources this number and it seems at odds with other delinquency status for 2nd quarter.

....

I detest reporters who strew stats around without no idea of what they really represent.

 

Yep. I should have been suspicious too. At that rate it would be hard for banks to make money from CCs. Big difference between the percentage late and the percentage change. @8ball dug up more reasonable numbers.

[hdporter]

11 hours ago, cashnocredit said:

Yep. I should have been suspicious too. At that rate it would be hard for banks to make money from CCs. Big difference between the percentage late and the percentage change. @8ball dug up more reasonable numbers.

 

To be fair, at first glance at the stats, my brain shouted, "HOLY F***; Time To Sell !!".  It was only when I went looking for corroboration that a more reasoned, "NFW!" was prompted.

[supern8ural]

I wonder how much of this is due to people like me who use a credit card for 90% of my purchases due to better consumer protections and cash back, but pay off my balance in full every month (if not every two weeks)

[hegemony]

2 hours ago, supern8ural said:

I wonder how much of this is due to people like me who use a credit card for 90% of my purchases due to better consumer protections and cash back, but pay off my balance in full every month (if not every two weeks)

^^^BINGO^^^

[TheVig]

When I wake up in the morning, any balances I have will be zero. Like they are every Friday when I wake up.

 

If I'm guilty of anything, it's my small contribution to the trillions of unused credit.