Household Debt Reaches New High-Water Mark as Delinquency Rates Remain at Low Tide

The total amount of household debt in the United States has topped $15 trillion for the first time, and delinquency rates on most types of consumer credit continued their downward trend — largely due to measures put into place during the COVID-19 pandemic — but there was still more than $412 billion of consumer debt that was considered to be delinquent, according to data released this week by the Federal Reserve Bank of New York. Also reported was the continued decline in the number of individuals who had a debt placed with a third-party collection agency.

Interestingly enough, some of the trends that occurred during the pandemic have started to fade and are being replaced by more typical consumer behavior. For example, many consumers used the pandemic and lockdown periods as an opportunity to pay down their debts, especially their credit cards. But balances on credit cards continued to increase during the third quarter, and usage rates are returning to normal levels, the report noted.

“We are again seeing credit card balances increase in the third quarter after a solid rise in the previous,” said Donghoon Lee, research officer at the New York Fed, in a statement. “As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances. At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends, although from lower levels.”

The number of individuals with a debt in collection has fallen precipitously since 2017, dropping from about 12% then to less than 7% currently, according to the report. The average amount in collection, though, has stayed relatively stable around $1,400.

Overall, the percentage of consumer credit that became “seriously” delinquent — at least 90 days past due — was 0.7% in the third quarter, compared with 1.7% in the third quarter of 2021. All of the credit types tracked in the report — mortgage, home equity line of credit, student loan, auto loan, credit card, and other — reported lower seriously delinquency rates on a year-over-year basis.

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