The total amount owed by consumers nationwide on their credit cards fell in the first quarter of 2024, compared with the fourth quarter of 2023, which may seem like a good thing. But the decrease from the last three months of one year to the first three months of the next is normal — Christmas is over — and there is another data point that is troubling — more consumers are finding themselves maxed out on their credit cards, which means they are running out of emergency money.
Nearly one-fifth of consumers were at or above 90% of their available credit on their credit cards, according to data published this week by the Federal Reserve Bank of New York. And, probably to the surprise of nobody, more of those individuals are starting to fall behind on making their payments. The average balance for an individual who has used at least 90% of their available credit was about $5,000, according to the data. Generally, younger individuals (members of Generation Z and Millennials) and individuals in the lower income brackets were more likely to find themselves delinquent on their credit card payments. While the share of consumers who are maxed out is still lower than what it was before the COVID-19 pandemic, it has risen steadily for the past two years.
After falling consistently for six straight years, the number of consumers who had an account placed with a collection agency has started to inch upwards while the average balance of those debts being placed with an agency remained stable after two years of steady increases.
“Everything is more expensive. Debt is more expensive. Rent is more expensive. Food, gas, everything,” says Charlie Wise, senior vice president at TransUnion, in a published report. “Even with relatively healthy wage gains we’ve seen over last several years, many consumers just aren’t keeping up with the price pressures.”
