NEW YORK—Two recent consumer trends indicate borrowers’ ability to make payments is getting stretched.
What to watch: rising auto repossessions and a growing rate of minimum credit card payments.
“Those figures complicate the notion that the consumer is relatively healthy, a warning sign for the broader economy. Two new reports out this past week show some cracks in the consumer's finances,” Axios said.
The number of credit card holders making only minimum payments on their bills has jumped to a 12-year high, a study by the Philadelphia Federal Reserve found. The level of cardholders only making minimum payments rose to 10.75% in the third quarter of 2024, the study found, continuing an upward trend from 2021, Axios noted.
The number of 30+ day delinquencies also rose during this period, up to 3.52%.
“That's double the delinquency rate of 1.57% from the pandemic low in the second quarter of 2021,” Axios said.
The number of car repossession assignments, Axios said, also suggests that people are experiencing more difficulty paying their regular bills.
“The rate of vehicle repossession assignments at the end of 2022 surpassed pre-pandemic levels, according to a Consumer Financial Protection Bureau report. In the month of December 2022, 0.75% of all outstanding vehicle loans were assigned to repossession – a 22.5% increase from December 2019,” Axios said.