Mounting Delinquencies: Credit Cards & Car Loans Surge

  • Consumer debt continues to climb, causing strain in the form of increasing delinquencies
  • Lower-income households and younger consumers are falling behind at a faster rate
  • Credit-card balances and car loans are particularly concerning
  • Delinquencies are rising for all demographics, but millennials and lower-income households are most affected
  • Student-loan balances remain high, adding to financial stress
  • Credit-card debt increased by $50 billion in the fourth quarter, reaching $1.13 trillion
  • 8.5% of credit-card debt became 30 days past due and 6.3% flowed into serious delinquency
  • Car-loan balances added $12 billion, reaching $1.6 trillion in the fourth quarter
  • 7.6% of car-loan debt became 30 days late and 2.6% became 90 days late
  • High borrowing costs and expensive cars contribute to car-loan delinquencies
  • Despite increasing delinquencies, more household debt is current compared to pre-pandemic levels


Consumer debt in the United States continues to climb, and the impact can be seen in the rising number of delinquencies on car loans and credit cards. While many households are managing their finances well, recent data from the Federal Reserve Bank of New York highlights troubling trends among lower-income households and younger consumers. The growth of total household debt, including mortgages, car loans, credit cards, and student loans, is a cause for concern, particularly due to the increasing delinquencies on credit cards and car loans. This article will explore the implications of these delinquencies and the specific challenges faced by different demographics.

Credit-Card Delinquencies

Financial Stress Among Millennials and Lower-Income Households

The New York Fed’s quarterly report on household debt reveals a significant increase in credit-card delinquencies, especially among millennials and lower-income households. For millennials, who make up a significant portion of the population, the burden of credit-card debt is becoming increasingly challenging to manage. Additionally, lower-income households, where debts and basic expenses consume a larger share of income, are also struggling to keep up with credit-card payments. These delinquencies are a clear sign of increased financial stress within these demographics.

Rising Debt and Transition into Delinquency

The fourth quarter of 2021 saw an additional $50 billion in credit-card debt, driven by the holiday shopping season. This brings Americans’ total credit-card balances to $1.13 trillion. What is particularly concerning is the transition of credit-card debt into delinquency. During the fourth quarter, 8.5% of credit-card debt became 30 or more days past due, and 6.3% flowed into serious delinquency, meaning it was at least 90 days past due. These delinquency rates have not been this high since the second quarter of 2011.

Car-Loan Delinquencies

The High Cost of Cars and Borrowing

Car-loan delinquencies are also on the rise, highlighting the challenges faced by buyers, especially those with lower credit scores. The increasing cost of cars, coupled with higher borrowing costs for subprime borrowers, has resulted in a significant burden on those seeking car financing. Interest rates on new-car loans for subprime borrowers ranged from 17% to 22% last year, according to Fitch Ratings. This translates to substantial monthly payments for many individuals, not including car-insurance costs. The average transaction price for a car as of December was $48,759, further exacerbating the financial strain on buyers.

Delinquency Rates and Financial Pressures

In the fourth quarter, 7.6% of car-loan debt became 30 days late, and 2.6% became 90 days late. These delinquency rates have not been higher since the second quarter of 2010. The data underscores the financial pressures faced by car buyers, particularly those with lower credit scores. The combination of high borrowing costs and expensive cars makes it challenging for individuals to keep up with their car-loan payments, leading to increased delinquencies.


The increasing delinquencies on credit-card and car-loan debt are clear indicators of the financial stress faced by many households, especially among millennials and lower-income individuals. As consumer debt continues to climb, it is crucial to address the challenges faced by these demographics and explore potential solutions. The data from the New York Fed also highlights the importance of monitoring debt levels and delinquencies to ensure economic stability. To mitigate the impact of rising delinquencies, it is essential to promote financial literacy and provide support systems for those facing financial difficulties. By addressing these issues, we can work towards a more financially resilient society.

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