Consumer stress is on the rise, as a growing number of credit card holders are only making minimum payments on their bills, with the share of active holders making baseline payments reaching a 12-year high. Delinquency rates have also increased, with more cardholders more than 30 days past due. Despite signs of strength in consumer spending, average credit card rates have climbed to over 20%, hitting higher balances which have increased by over 50% since 2021. Many consumers are using credit cards for essentials and only making minimum payments, which can result in significant interest costs over time. The trend towards minimum payments is concerning, with a high perceived probability of missing debt payments over the next three months. Additionally, mortgage originations have hit a 12-year low, as high mortgage rates have reduced demand for refinancing. Debt-to-income ratios on home loans have also increased, posing obstacles for housing and homeownership. Overall, consumers are facing challenges due to high interest rates, increasing debt, and rising delinquency rates, despite some positive indicators of consumer spending strength.
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More consumers making minimum credit card payments amid rising delinquencies
