**
A record number of consumers are making only minimum credit card payments as delinquencies rise, with 10.75% of active holders just paying the minimum in the third quarter of 2024—a high not seen since 2012. The share of balances more than 30 days past due rose to 3.52%, up from 3.21%, indicating a significant increase in delinquency rates compared to previous years.
Despite the rising trend, delinquencies remain well below the 6.8% peak during the 2008-09 financial crisis and are not yet showing signs of major strain. However, consumer stress is intensifying, with more people opting for minimal payments on their credit cards according to a Philadelphia Federal Reserve report.
Consumer spending growth has slowed, but remains healthy at nearly 2.3% after a 2.9% rise in November. Average credit card interest rates have soared, with the Fed noting that consumer spending is still strong despite these challenges. The total owed on revolving credit reached $645 billion, up from a decade-low of $423 billion in 2021.
Credit card stress is a growing concern, as nearly one in five people now face the risk of missing a minimum payment over the next three months. Home loan demand has also declined sharply, with originations hitting a more than 12-year low after peaking at $219 billion in 2021.
The rise in minimum payments and delinquencies reflects broader economic pressures, including higher interest rates and the increasing use of credit cards for necessities due to inflation. Consumers are struggling to keep up with rising costs while relying on credit lines for basic needs.
Source: https://www.cnbc.com/2025/01/22/minimum-payments-on-credit-cards-hit-record-level-as-delinquencies-also-rise.html