US credit-card delinquency rates were the highest on record in the fourth quarter, according to a Federal Reserve Bank of Philadelphia report.

Almost 3.5% of card balances were at least 30 days past due as of the end of December, the Philadelphia Fed said. That’s the highest figure in the data series going back to 2012, and up by about 30 basis points from the previous quarter. The share of debts that are 60 and 90 days late also climbed.

“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,” according to the report.

Nominal credit card balances set a new series high and card utilization also rose, as consumers stretched credit lines further. Inflation-adjusted credit card balances remained below fourth-quarter 2019 levels.

The numbers signal added pressure on US household finances amid higher costs of living. About 10% of credit-card borrowers now have an account balance that exceeds $5,200, according to the Philadelphia Fed. One-quarter of active accounts have a balance of over US$2,000 for the first time.

But, underscoring the dichotomy among consumers, about one-third of card holders pay their balance in full every month.

The Philadelphia Fed found that credit scores at the 10th and 25th percentiles of cardholders decreased to their lowest levels since the first quarter of 2020, indicating further performance deterioration could be on the horizon.

Issuers have responded by lowering the credit limit for new accounts. The median account opened with a US$3,000 limit in the fourth quarter, down from the US$3,368 high in the second quarter.

The data series, which started in the third quarter of 2012, covers loans by large lenders with at least US$100 billion of assets, representing roughly four-fifths of total bank card balances.

  - Bloomberg