The Zhitong Finance App learned that the US household debt problem is getting worse. It has set a new record and reached 17.7 trillion US dollars, an increase of 1.1% compared to the previous quarter (an increase of 184 billion US dollars). This data highlights the increasing financial pressure faced by American households against the backdrop of increasing inflation.
According to the “Quarterly Report on Household Debt and Credit” released by the Federal Reserve Bank of New York on Tuesday (May 14), since the COVID-19 pandemic began, US consumer debt has increased by a total of 3.4 trillion US dollars, and interest rates on debt have also risen. Rising prices, particularly necessities such as food and rent, have forced many households to use credit cards to pay for everyday expenses, further increasing the financial burden. Joelle Scally (Joelle Scally), head of the New York Federal Reserve's family and public policy research department, pointed out that in the first quarter, serious credit card and car loan delinquency rates rose among all age groups, indicating that the financial situation of some households is deteriorating further.
The report further notes that total debt in the first quarter reached $1.12 trillion, a slight decrease from the previous quarter, showing seasonal changes after holiday debt. However, compared to the first quarter of 2020, the debt balance still increased by nearly 25%.
Bankrate's senior analyst Ted Rossman predicts credit card balances could hit a new high in late 2024 as inflation and interest rates are likely to continue to rise. Federal Reserve researchers also pointed out that high credit card usage is a key warning sign of possible future delinquency.
As of March 2024, approximately 3.2% of debt was in arrears. Although lower than the level in the fourth quarter of 2019, the delinquency rate is rising across all debt types. Research by the Federal Reserve Bank of St. Louis shows that credit card delinquency rates are gradually returning to more common levels due to government aid measures during the pandemic.
Additionally, high-utilization credit card accounts default more quickly, which is particularly evident in accounts with over 90% credit limits. The Federal Reserve Bank's study found that younger borrowers and lower-income borrowers are more likely to have problems under financial pressure, particularly among millennials, where delinquency rates are higher than pre-pandemic levels.
The auto loan delinquency rate is also rising, and the average monthly payment in 2023 has risen to $738. Currently, about 2.8% of car loans are overdue for more than 90 days, involving more than 3 million vehicles. This makes auto loans the second largest type of debt after mortgages.
Housing debt is still a major part of household debt, accounting for more than 70% of total debt. Although this portion of debt is performing well, more and more homeowners are using the net worth of their homes to borrow. In the most recent quarter, the amount of new household net worth loans recorded the biggest increase since 2008.
The total amount of student loans is basically flat, at 1.6 trillion US dollars, but the exact amount overdue is not easy to determine because federal student loan payment information is usually not reported to the Credit Bureau until the fourth quarter of each year.