The share of outstanding US consumer debt in delinquency rose sharply in the fourth quarter, reaching its highest level in almost five years, according to a Federal Reserve Bank of New York report. Total household debt surpassed $18 trillion, with a 0.5% increase.
Americans are struggling financially due to elevated interest rates imposed by the US central bank since 2022. The report highlights auto loans as a significant source of strain, citing higher car prices and interest rates that have driven monthly payments upward.
The share of auto loans transitioning into serious delinquency rose to 3%, its highest level since 2010. Credit-card balances showed the fastest increase in the fourth quarter, rising 3.9%. Student loan debt rose 0.6% and mortgage debt advanced a minimal 0.1%.
A federal program that paused monthly payments on student loans ended last year, allowing missed payments to be reported to credit bureaus. This has left millions of Americans potentially behind on their payments, which will begin appearing on reports in the first quarter of 2025.
The report highlights the growing concern over US consumer debt, particularly among those struggling financially. With interest rates remaining high, Americans face increasing pressure to make payments, putting a strain on household finances.
Source: https://finance.yahoo.com/news/us-consumer-debt-delinquency-hits-160000056.html