Younger adults in the U.S. saw the largest annual increase in 90-day delinquencies in credit card payments compared to other age groups in the third quarter, Insider reported.
The group of people aged 18 to 29 saw their 90-day crime rate rise to over 6%, the largest increase of any age group from the third quarter of 2021 to the third quarter of 2022.
The overall rate for the number of credit card payments that were more than 90 days late was 3.7% in the 3rd quarter. In the 3rd quarter of 2021, it was 3.2%, according to data from The Federal Reserve Bank of New York.
The Fed’s work showed that everyone is starting to accumulate credit card debt and drive up inflation — in contrast to historic lows from the pandemic.
Related: The Fed raised interest rates again. Here’s what that means for your wallet.
“The first three quarters of 2022 have seen a rapid increase in credit card balances after they fell sharply during the early part of the COVID pandemic,” the Fed wrote in a related blog post earlier this month.
For crime in general, the researchers argued: “Is this simply a return to previous levels, with leniency ending and stimulus savings drying up, or is this a sign of trouble ahead?”
As Insider noted, it’s not a great time for young people to run up credit card debt. Bloomberg economists said in October that there is a 100% chance of a US recession within the next 12 months.
These types of economic events usually hurt younger workers more. It did so when the pandemic also hit, resulting in higher unemployment for people aged 16 to 24. This has economic consequences that can last for years, according to the Economic Policy Institute.
Millennials’ capital accumulation is damaged for life by the recession of 2008 and the pandemic economic crisis of 2020, The Washington Post previously reported.
Credit card debt has increased due to depressed wages, rising inflation, and at the same time no real decline in consumption, the Fed noted in the blog.
“With prices more than 8 percent higher than they were a year ago, it is perhaps not surprising that balances are increasing,” the researchers wrote.
Credit card debt increased by $38 billion from the second quarter to the third in 2022. That was a 15% increase, “the largest in more than twenty years,” the Fed noted.
Due to pandemic relief programs and shuttered businesses, Americans saved at historic rates, driving down credit card debt. It seems the trend is over.
The research “sheds light on the faster-growing debt burdens and delinquency of younger and less affluent cardholders, and may suggest disparate effects of inflation,” the Fed wrote.