Total US revolving credit card debt has crossed $1.3 trillion for the first time in the Federal Reserve's data series, and the accompanying delinquency metrics paint a troubling picture of household financial stress. The 90-day delinquency rate has risen to 3.2% β its highest level since 2012 β meaning approximately 40 million American credit card accounts are seriously behind on payments.
The math of the problem is straightforward. Three years of above-target inflation effectively reduced the purchasing power of American wages, and tens of millions of households bridged the gap with credit cards rather than reducing spending. The average US household now carries $7,200 in credit card debt at an average interest rate of 21.6% β meaning they are paying $1,555 in interest annually just to carry the balance.
The demographic concentration of the problem is revealing. Households earning under $50,000 per year have seen the steepest increase in delinquencies. Gen Z and Millennial borrowers β who lack the home equity and investment assets that cushion older households β account for 58% of new delinquencies despite being only 39% of US credit card holders.
Congress is considering legislation capping credit card interest rates at 18% β a proposal that JPMorgan Chase CEO Jamie Dimon has warned would result in millions of Americans losing access to credit entirely.
