Americans’ debt levels — and delinquencies — are on the rise

The resilient consumer has kept the US economic engine running, but it’s coming at a big cost: More Americans are falling behind on their credit cards.

During the third quarter, the rate of households becoming delinquent or entering serious delinquency (90 days or more behind) on their credit cards was the highest since the end of 2011, according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit released Tuesday.

The increases in credit card delinquency were the sharpest among borrowers in the range of 30 to 39 years old, according to the New York Fed.

Newly delinquent auto loan balances continued to climb, as well, with transitions into serious delinquencies hitting 13-year highs, survey data showed.

Still, thanks mostly to higher-quality mortgage loans, overall delinquencies remain below pre-pandemic levels, New York Fed researchers said.

During the third quarter, household debt increased 1.3% to $17.29 trillion.

Credit card balances, which in the second quarter surpassed the trillion-dollar mark for the first time, continued to grow at historic rates. Balances totaled $1.08 trillion last quarter, increasing $48 billion from the quarter before and jumping by a record $148 billion from the third quarter of last year.

“Credit card balances experienced a large jump in the third quarter, consistent with strong consumer spending and real GDP growth,” said Donghoon Lee, economic research adviser at the New York Fed, in a statement. “The continued rise in credit card delinquency rates is broad based across area income and region, but particularly pronounced among millennials and those with auto loans or student loans.”

New York Fed researchers said the spike in households transitioning into delinquency is “surprising” and “unusual,” given the relative strength of the economy and labor market. They plan to dig more into the potential causes when conducting future surveys but said the increase could be attributable to changes in lending standards, consumers overextending themselves or a signal of “real financial stress.”

Mortgage originations fell to $386.37 billion, continuing a period that’s considerably below the high-flying housing activity in 2020 and 2021. This year is on pace to have the lowest origination values since 2014, New York Fed data shows.

This story is developing and will be updated.