In what is a recipe for problems, the average credit card balance for consumers continues to trend upward while the number of consumers making more than the minimum payment on their card balances every month is going in the opposite direction, according to data released last week by TransUnion.
Driving the news: The latest TransUnion Credit Industry Insights Report (CIIR) for the second quarter of 2024 reveals that the average credit card balance per consumer has surged to $5,897, up from $5,325 in same period last year. Concurrently, the percentage of consumers making more than the minimum payment on their credit card balances has dropped to 73.5%, down from 75.2% last year. This trend reflects a growing number of consumers struggling to keep up with their debt obligations, raising concerns about their financial stability.
By the numbers:
- Delinquency Rates: Serious delinquency rates have risen across most credit products, with bankcard delinquencies reaching 2.26% in the second quarter, the highest level since 2011. Auto loans have also seen a 1.44% increase in delinquencies. These rising delinquency rates have led to a 10% year-over-year increase in total charge-off volumes, underscoring the financial strain many consumers are facing.
- Credit Access: The number of consumers with access to credit continues to rise, with the subprime segment (consumers with credit scores between 300 and 600) now accounting for 22% of total credit access. Super-prime consumers (credit scores above 781) have also seen growth, making up 35% of total credit access. This trend suggests that while more consumers are gaining access to credit, a significant portion of this growth is concentrated among higher-risk borrowers.
- Balances and Payments: Total balances across all credit products have increased by 6.5% year-over-year, driven by the rising cost of living and declining savings rates. The growing average credit card balance, coupled with the decrease in positive aggregate excess payments (AEP)—where fewer consumers are paying more than the minimum due—indicates a potential increase in financial vulnerability among consumers. This is particularly evident in the non-prime segment, where the average minimum payment due has risen by 8.4% year-over-year.
