Credit Card delinquencies are on the rise again

The Street

TheStreet’s Conway Mittens brings you the biggest news of the day, including what investors are watching and why credit card holders continue to pile up debt.

Transcript

00:00I'm Conway Gittins reporting from the New York Stock Exchange.

00:03Here's what we're watching on the street today.

00:05There's a mixed vibe on Wall Street

00:07this Thursday as a rally in AI-related stocks

00:10take a pause.

00:11On the earnings front, American Airlines

00:13is bucking the trend of good news from the airline sector.

00:16Fourth quarter results came in better than expected,

00:19but the company warned this quarter

00:21will be a money-losing one.

00:23American Airlines is struggling to fix a frayed relationship

00:27with its corporate clients.

00:29Turning to other business headlines,

00:31the mighty American US consumer is showing

00:34signs of credit card strain.

00:37The number of credit card borrowers

00:38who are only making their minimum monthly payments

00:41jumped to 10.75% in the third quarter,

00:44according to a report released by the Philadelphia Federal

00:47Reserve.

00:48That number hasn't been that high in over a decade.

00:52Delinquency rates are also on the rise.

00:55The number of credit card accounts

00:56that had a late payment of more than 30 days

00:59jumped to 3.5%, which is double the low seen

01:03when pandemic-era stimulus checks helped consumers

01:06shore up their balance sheets.

01:07While the rise in late payments is noticeable,

01:10it is nowhere near what we saw during the financial crisis

01:13when the late payment rate peaked at 6.8%.

01:17The report serves as a reminder that even though the overall

01:20economy remains healthy, the job market is steady,

01:23and the annual average wage gain is outpacing inflation,

01:28there are pockets of consumers who are still struggling.

01:32Food is expensive, rent is expensive,

01:34and since the Fed pushed interest rates from near zero

01:37to a peak of 5.25% to 5.5%,

01:40charging anything on a credit card is more expensive.

01:43There was some relief in 2024 when the Fed lowered

01:47its key lending rate by a full percentage point,

01:50but there's uncertainty about how much lower

01:52interest rates will go in 2025.

01:56That'll do it for your daily briefing

01:58from the New York Stock Exchange.

01:59I'm Conway Gittens with The Street.

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