Young adults in the United States experienced the largest annual increase in 90-day overdue credit card payments compared to other age groups in the third quarter, Insider reported.
The 18-29 age group saw their 90-day delinquency rate jump to more than 6%, the biggest increase of any age group from the third quarter of 2021 to the third quarter of 2022.
The overall rate of overdue credit card payments over 90 days was 3.7% in the third quarter. In the third quarter of 2021, it was 3.2%, according to data from the Federal Reserve Bank of New York.
The Fed’s work has shown that everyone is starting to rack up credit card debt, which is driving up inflation — unlike historic pandemic-era lows.
Related: The Fed raised interest rates again. Here’s what that means for your wallet.
“The first three quarters of 2022 saw a rapid increase in credit card balances after they contracted sharply at the onset of the COVID pandemic,” the Fed wrote in a related blog post earlier this month. this.
For delinquency as a whole, the researchers posited, “Is this simply a return to earlier levels, with forbearance ending and stimulus savings drying up, or is this a sign of trouble to come?”
As Insider noted, now is not a good time for young people to go into debt on their credit cards. Bloomberg economists said in October that there was a 100% chance of a recession in the United States within the next 12 months.
These types of economic events generally hurt younger workers the most. It also did so when the pandemic hit, leading to higher unemployment among people aged 16 to 24. This has financial impacts that can last for years, according to the Economic Policy Institute.
Millennials’ capital accumulation is damaged for life due to the 2008 recession and the 2020 pandemic economic crisis, The Washington Post previously reported.
Credit card debt has risen amid squeezing wages, rising inflation and, at the same time, a real slowdown in consumer spending, the Fed noted in the blog post.
“With prices more than 8% higher than they were a year ago, it’s perhaps unsurprising that sales are on the rise,” the researchers wrote.
Credit card debt grew by $38 billion between the second and third quarters of 2022. That’s a 15% increase, “the biggest in more than two decades,” the Fed noted. .
Due to pandemic relief programs and business closures, Americans have been saving at historic rates, reducing credit card debt. It looks like the trend is over.
The research “sheds light on the more rapidly rising debt burden and delinquency of younger, less affluent cardholders, and may suggest disparate impacts of inflation,” the Fed wrote.