Twelve-year high for the percentage of past-due credit card accounts

An increasing proportion of credit card accounts have past due payments.

In a news statement issued on Wednesday, April 10, the Federal Reserve Bank of Philadelphia stated that the percentage of accounts that were past due by 30 or more days and 60 or more days in the fourth quarter of 2023 was the highest since the bank started disclosing this information in 2012.

In a "Q4 2023 Insights Report" released on Wednesday, the Philadelphia Fed stated that "stress among cardholders was further underscored in payment behavior, as the share of accounts making minimum payments rose 34 basis points to a series high from last quarter's reading."

In addition, the study states that throughout the quarter, the percentage of accounts that paid their entire balance increased by 8 basis points.

The research also states that nominal credit card balances increased and reached a new high in the fourth quarter. But even after accounting for inflation using the CPI, they are still lower than what was observed in the fourth quarter of 2019.

"However, with the median real account balance rising 5.4% annually, real account balances are rapidly returning to pre-pandemic levels." the report said

According to the report, mortgage originations fell to their lowest level since the start of the reports' series in the fourth quarter. "Market headwinds continued to stifle overall mortgage demand," the report stated.

The report also mentioned modifications to big banks' underwriting procedures. According to the research, the median front-end debt-to-income ratio reached a record high, even though origination credit scores are still relatively close to what was observed in the fourth quarter of 2021. Furthermore, there has been a rise in the median origination loan size and loan-to-value.

The research stated that "taken together, the increases highlight ongoing affordability issues as housing costs consume a larger share of borrowers' budgets."This survey is being released two days after the Federal Reserve Bank of New York stated that customers are becoming more anxious about unpaid debt.

According to the New York Fed, "the average perceived probability of missing a minimum debt payment over the next three months rose by 1.5% to 12.9%." “Since the COVID-19 pandemic began, this is the highest reading in four years.”