Credit card payments being late are increasing.which shows that consumers are having financial problems.

People are not paying their credit card bills on time

Credit card payments being late are increasing.which shows that consumers are having financial problems.

The percentage of people not paying their credit card and car loan bills is now at the highest level since the Great Recession, according to a report from the New York Federal Reserve released on Tuesday.

Why it's important:

 The strong ability of American shoppers to keep spending money is a main reason the economy hasn't gone into a recession. The rising stress on families’ finances is a concern in the United States. The economy has remained strong despite facing threats.

The increase in people not paying their debts on time shows that the Federal Reserve's decision to raise interest rates a lot is making it harder for people to borrow money.

Wilbert van der Klaauw, who works at the New York Fed, said that more people are falling behind on their credit card and car loan payments compared to before the pandemic.

"This shows that younger and lower-income households are having more trouble with money. "

In late 2023, about 8. 5% of credit card bills and 7. 7% of auto loan bills were not paid on time, according to the New York Fed's report on how much money people owe and how they use credit.

Yes, however

 student loans and mortgages have lower rates of not being paid on time than before the pandemic.

In the fourth quarter, the overall rate of people not paying their debts rose slightly to 3. 1% This is still 1. 6 percentage points lower than before the pandemic.

The New York Fed said that if you miss paying back your federal student loan, it won't show up on your record until the end of the year. This makes the number of late payments seem lower than it really is.

The increase in late payments for credit cards and car loans is confusing because it's happening at a time when people seem to have enough money, with a lot of jobs available and wages going up.

During a talk with reporters, researchers from the New York Federal Reserve said that some people are spending too much money and there are many people who can't find jobs. This might be causing more people to miss their loan payments.

Looking back:

 More people are not paying their bills on time again, after a period during the pandemic when fewer people were late on their student loans and mortgages because they didn't have to pay them, and they also got extra money from the government.

The number of people not following the rules has been slowly going up since those rules ended.

It's harder to get credit now. Banks are being more careful about who they give loans to, according to a survey by the Federal Reserve.

The demand for consumer loans like credit cards, car loans, and personal loans is very low. This means the amount of money being lent for these types of loans, which is important for consumer spending, will decrease soon. This was written by ING economist James Knightley.

The New York Fed found that people who got car loans in the last two years are having more trouble making payments than those who got loans earlier.

They think it could be because people had to pay more for cars and had to borrow more money at higher interest rates during those years.