: Credit-card debt failed to decline in first quarter — for first time in over 20 years, New York Fed says

by | May 15, 2023 | Stock Market

U.S. credit-card debt appears to be stubbornly holding near $1 trillion, the Federal Reserve Bank of New York said in its quarterly report on household debt and credit Monday.  In the fourth quarter, when credit-card debt tends to rise due to holiday shopping, credit-card balances hit a whopping $986 billion, surpassing pre-pandemic levels, the New York Fed said in a previous report. 

The first quarter, however, is usually marked by falling credit-card debt as consumers pay that off. But that wasn’t the case in 2023: Credit-card balances held firm at $986 billion, the New York Fed said Monday. It was the first time levels of credit-card debt had failed to fall between the fourth and first quarters in more than 20 years, New York Fed researchers said.   At the same time, credit-card interest rates are also on the rise, according to Bankrate data. The average credit-card interest rate is currently at a record high of 20.33%, making it more expensive for consumers to carry debt. Interest rates can also vary by consumers’ credit scores, skewing higher for borrowers who are considered more “risky.” Young adults in communities of color are more likely to be in debt compared to their counterparts in majority-white communities and more likely to have lower credit scores.  Still, on the whole, total U.S. household-debt balances were up by $148 billion in the first quarter to reach $17.05 trillion, New York Fed researchers said — a slightly more muted increase compared to previous quarters, considering last year’s fourth and third quarters saw total debt levels rise by $394 billion and $351 billio …

Article Attribution | Read More at Article Source

Share This