WASHINGTON—Credit-card debt rose to a record in the final quarter of 2019 as Americans spent aggressively amid a strong economy and job market, and the proportion of people seriously behind on their payments increased.
Total credit-card balances increased by $46 billion to $930 billion, well above the previous peak seen before the 2008 financial crisis, according to data released by the Federal Reserve Bank of New York on Tuesday.
Some cardholders, particularly younger ones, are running into trouble.
The proportion of credit-card debt in serious delinquency, meaning payments were late by 90 days or more, rose to 5.32% in the fourth quarter, the highest level in almost eight years,
from 5.16% in the third quarter. The serious-delinquency rate for borrowers from 18 to 29 years old rose to 9.36%, the highest level since the fourth quarter of 2010, from 8.91%.
“There are increases in the credit-card-delinquency rate that make you wonder whether some parts of the population are not doing as well, or whether this is just a result of more relaxed lending standards,” Wilbert van der Klaauw, senior vice president at the New York Fed, said in an interview. “It’s something we are looking into.”
The fourth-quarter gain was substantial even accounting for the typical holiday-season increases, Fed economists said. Reclassifying debts on some retail store cards as credit-card debts, rather than non-credit card consumer debt, explains some of the increase, they said.
The rise in card balances is part of the continued expansion of consumer credit seen in recent years, which started with growth in student and auto debt and then shifted to mortgage and credit-card debt. The economy is in its 11th year of expansion, and unemployment is near a 50-year low.
Total household debt increased 1.4% to a record $14.15 trillion in the fourth quarter from the third. That marked the 22nd consecutive quarterly increase as total debt was $1.5 trillion above the previous peak of $12.68 trillion in the third quarter of 2008. The figures aren’t adjusted for inflation.
Mortgage debt rose by $120 billion to $9.56 trillion in the fourth quarter, fueled by a boom in mortgage refinancing as interest rates decline.
Mortgage originations, including refinancing, jumped 42% to $752 billion, the highest level since the fourth quarter of 2005, near the peak of the precrisis housing boom. The median credit score among new borrowers rose five points to 770.
The New York Fed’s report is based on data from a nationally representative sample of individual and household-level records drawn from anonymized Equifax credit data.
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