More people fell behind on credit card bills this year. Here’s how rough it could get in 2024.

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After more Americans fell behind on their credit card payments this year, 2024 delinquency trends could likely get worse before they get a little better.

This year, credit card balances soared past $1 trillion for the first time, powered by rising prices and rising interest rates that made it increasingly expensive to carry a balance.

Meanwhile, the share of credit card debt falling behind for the first time climbed to 8% in the third quarter. That’s up from 6.5% in the first quarter of 2023.

It’s been more than a decade since the share of 30-day credit card delinquency was that high, according to household debt statistics from the Federal Reserve Bank of New York.

At a time when markets wonder about the ongoing strength of consumers and their mood, new Goldman Sachs estimates say credit card delinquencies will keep rising in the new year.

The rate of new credit card delinquencies will climb to 9.5% by the first half of 2024 before it eases to around 9% by the end of the year, researchers said in a Thursday note. Low-income card holders will be strained the most, they added.

The first quarter of 2011 was the last time early-stage credit-card delinquencies surpassed 9%, according to New York Fed statistics.

The weight of high credit card interest rates and restarted federal student loan payments will contribute to the ongoing rise, Goldman Sachs researchers said. Interest rate decreases and income growth will help the slight pullback for delinquencies in the second half of the year, they wrote.

Restarted student loan bills have translated into an average 7% hit on the income of households in lower ranges of the income ladder “which may have caused some borrowers to miss their credit card payments.”

Still, the authors are focused on the silver lining.

“Reassuringly, the recent rise in the delinquency rate does not appear to have been caused by distress in the labor market or unsustainable spending,” they wrote, going on to say that credit card data suggests people have “have pulled back their spending from elevated peaks in 2021 to be more in line with their incomes.”

Almost half of people (44%) said they wanted to save money, reduce spending and pay off debts in the new year, according to a YouGov poll on resolutions for 2024. The personal finance resolution was the third-ranked goal, behind eating healthier and losing weight.

But the delinquency drumbeat is getting picked up elsewhere.

Data is showing more people missing mortgage payments. The default rates on past-due Federal Housing Administration loans reached a nine-year high in November.

Though overall mortgage delinquency rates are still below pre-pandemic levels, it’s a trend “worth watching” one observer said.



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