Minimum payments on credit cards hit record level as delinquencies also rise

In this photo illustration the Visa, Mastercard and American Express logo on various credit cards and debit cards are seen beside US one dollar bills on January 4, 2025 in Somerset, England. Anna Barclay | Getty Images
Consumer stress has intensified, with an escalating share of credit card holders making only minimum payments on their bills, according to a Philadelphia Federal Reserve report. In fact, the share of active holders just making baseline payments on their cards jumped to a 12-year high, data thorough the third quarter of 2024 shows. The level rose to 10.75% for the period, part of a continuing trend that began in 2021 and has accelerated as average interest rates have soared and delinquencies also have accelerated. The increase also marked a series high for a data set that began in 2012. Along with the trend in minimum payments came a move higher in delinquency rates. The share of card holders more than 30 days past due rose to 3.52%, an increase from 3.21%, for a gain of more than 10%. It also is more than double the delinquency level of the pandemic-era low of 1.57% hit in the second quarter of 2021. The news counters a general narrative of a healthy consumer who has kept on spending despite inflation hitting a more than 40-year high in mid-2022 and holding above the Fed’s 2% target for nearly four years.
Signs of strength
To be sure, there remain plentiful positive signs. Even with the rising delinquency rate, the pace is still well below the 6.8% peak during the 2008-09 financial crisis and not yet indicative of serious strains.