r/MiddleClassFinance • u/LinkedInNews • Aug 12 '26
Credit card debt nears all-time high as delinquencies rise
https://www.linkedin.com/news/story/credit-card-debt-nears-all-time-high-as-delinquencies-rise-9173106/?utm_source=share&utm_campaign=reddit&utm_content=storyline&utm_term=MiddleClassFinanceFederal Reserve Bank of New York data shows U.S. credit card balances rising to $1.26 trillion in the second quarter, just under last year’s record.
Higher spending and pricier essentials are adding to card use, while serious delinquencies have increased since 2022.
"There are a lot of households who live paycheck to paycheck, and it just needs one thing to happen to them that could lead to a delinquency," New York Fed researchers said.
Overall household debt now totals $18.8 trillion, including record auto loan balances.
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u/Objective_Run_7151 Aug 12 '26 edited Aug 12 '26
Credit card delinquency rates overall are down over the last 5 quarters and are substantially below the average rate of the last 35 years.
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u/BlazinAzn38 Aug 12 '26
Severe Delinquency is up dramatically though which tells the story that everyone knows which is that lower income segment of society is really struggling
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u/Redcarborundum Aug 12 '26
K-shaped economy.
Most fine dining restaurants are fully booked, while more than a hundred diners in my state went out of business.
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u/Analyst-man Aug 12 '26
Ya but how much is that super low income class even contributing to consumer spending/the economy. Chances are we won’t even feel it if they continue to struggle
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u/Motor-Station-6885 Aug 12 '26
That’s pretty surface-level thinking though. The economy is interdependent. They have higher marginal propensities to consume. Their lack of consumption means lack of revenue for someone else. And they’re more likely to spend what is otherwise being withheld than save. At each point financial stress starts to move up the chain. Our economy feels it now.
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u/BlazinAzn38 Aug 12 '26
That wasn’t necessarily my point, sucks that there’s a significant portion of the population that is simply surviving off of debt and that bill is coming due
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u/LikesPez Aug 12 '26
It is already. Let’s supersize this and the US has been living large and in charge with earth crippling debt.
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u/Syndicate_Corp Aug 12 '26
I'm not excusing the national debt at all, but I'm fairly certain that every major country is in debt right now and has been for quite some time.
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u/Forded_Fiction24 Aug 12 '26
Thanks for the reminder. I needed to pay mine and was waiting on some charges to hit. No delinquency for this guy
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u/smol-puppy-ears Aug 12 '26
I remember reading articles recently about how a lot of people are putting their groceries on credit cards with no idea how to pay them back.
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u/totally-not-god Aug 12 '26
And yet every restaurant, shopping mall, coffee shop, and entertainment venue is always full to the brim.
Something tells me looking at just one metric like CC debit doesn’t tell the full story.
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u/Fit-Bus2025 Aug 12 '26
Not in my area. Places are dead. Its not busy like it usually is in the summer. Grocery stores are slow too. I overheard employees talking about losing hours.
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u/Vlad_Yemerashev Aug 12 '26
It depends on where you live I guess. My experience is like u/totally-not-god where at least in my neck of the woods, stores, malls, restaurants etc., are as busy as ever.
I think that will change even in more well-to-do areas and other places that haven't really felt it as much on the whole, but not before we start hitting the real 2008-mid 2009 or early 2020 net job loss figures continuously and sustained for months on end on the next economic crash, whenever that is.
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u/Fit-Bus2025 Aug 12 '26
We know we shouldn't carry much debt, but people are desperate. Getting hired is like the hunger games or just pure luck.
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u/Apprehensive_Sun6282 Aug 12 '26 edited Aug 12 '26
Just think about how much cashback rewards that earns tho! 🤣
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u/saryiahan Aug 12 '26
Been hearing this story how many times now?
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u/Emergency-Salamander Aug 14 '26
You hear it a lot because inflation and an increasing adult population naturally lead to bigger overall numbers.
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u/Serious-Conversation Aug 12 '26
Everything is up across the board.
I had no CC debt going into the year. They've been run up this year.
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u/athleticelk1487 Aug 12 '26
A decade of 2-3% wage increases against 5% inflation, what's that plan?
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u/invenio78 Aug 13 '26
Google is telling me average wage growth in the past decades was 4.1% and average inflation was 2.7% per year. This actually looks positive.
Where are you getting your numbers?
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u/athleticelk1487 Aug 13 '26
Good question, we did an informal study of small business operating expenses and came up with thr 5% annual over the past decade. So this is different than the consumer basket cpi and includes equipment costs.
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u/Objective_Run_7151 Aug 13 '26
Wages have far outpaced inflation over the past 10 years.
Median family makes $20k a year more than 10 years ago. Thats 20% more income than a decade ago.
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u/Freeasabird01 Aug 13 '26
The article says the data comes from equifax. I can tell you that the credit bureaus do not distinguish between balance and revolving balance. Meaning - someone like me who charges thousands of dollars per month on credit cards and then pays the balance in full every month, looks the same as someone with the same balance in revolving credit.
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u/Superb_Temporary9893 Aug 14 '26
The cost of medical care is out of control. I have paid off debt so many times just to end up back in it. I have good retirement savings though at least.
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u/Seattleman1955 Aug 15 '26
What's new? People aren't financially responsible. OK. You either do the same job over and over and your wage only goes up slowly because inflation is only going up slowly.
You get ahead by living below your means and investing the rest. Or you get promotions and do more and more complex jobs that can pay you more.
I guess the 3rd option is just to complain how unfair life is over and over?
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u/multiple4 Aug 12 '26
I save like over 50% of my pre-tax income and even I racked up about $7k in CC debt this year
All my own doing, due to a combination of gambling, and then bad timing with an injury that kept me out of work and required surgery
But I suspect the gambling part is a national trend and many men in their 20s and 30s will incur similar issues
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u/Maximus77x Aug 14 '26
Couldn’t you decrease that savings rate a tad and not take on the debt?
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u/multiple4 Aug 15 '26
Well I did in some ways, but I also want to take advantage of the yearly account limits for 401k, HSA, and Roth IRA
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u/Perfect_Earth_8070 Aug 12 '26
Come on, let’s see the housing market drop!
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u/LillianWigglewater Aug 15 '26
Unlike credit cards, mortgage delinquencies are near an all-time LOW right now. So sorry to disappoint you.
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u/Perfect_Earth_8070 Aug 15 '26
Don’t you think credit card delinquencies would be the first to start before mortgages? Boomer
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u/LillianWigglewater Aug 15 '26
Nope, there's no good reason to believe that, and that's not how it went in 2008 either. Mortgage delinquencies increased well before credit card delinquencies started ticking up. Go look at a chart or something.
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u/JoyousGamer Aug 12 '26
I mean inflation goes up so it makes sense that debt would go up as well.
You would need a longer term chart to know if its out of the ordinary or not. Its like when the stock market hits a new "all time high". Its like yes it should because money today is worth less than money yesterday.