Americans run up their credit cards.
Credit card debt reached an all-time high after fourth-quarter balances rose $ 46 billion to $ 930 billion in the fourth quarter of 2019, surpassing their pre-recession peak. Yuka Hayashi reported for the Wall Street Journalciting new Federal Reserve data,
The upward trend is a double-edged sword, Hayashi wrote: Increased spending signals a strong economy, but people are having trouble paying off their shopping habits.
Major credit card defaults, defined as payments made at least 90 days after the due date, rose from 5.16% to 5.32% over the same period – the highest level in nearly eight years, the Fed said. The rates of serious crime are even higher for people between the ages of 18 and 29 and are above the record high of 2010 from 8.91% to 9.36%. A chart that breaks down the Fed's data shows that a larger percentage of total credit card debt is held by those aged 50 and over.
This could explain why more than half (67%) of credit card-indebted millennials were interviewed in an 2019 Insider and Insider test Consult tomorrow Surveys have some or many problems with credit card payments.
Rising costs of living accelerate the growth of millennium wages
The serious crime rates could be due to the financial realities of millennials, particularly the rising cost of living that exceeds their income growth.
Several studies show that millennials have less purchasing power than previous generations of the same age. ON Report from 2018 by Student Loan Hero noted that US rent, home prices, and tuition fees rose faster than income. The latter is a particularly heavy weight – 62% of adults ages 18 to 29 with bachelor's degrees deal with student debts.
It doesn't help that the average income of these 25-34 year olds has only risen by $ 29 since 1974, adjusted for inflation. According to a recent SuperMoney report the analyzed US Census Bureau data. They earned an average of $ 35,426 this year, compared to just $ 35,455 in 2017.
This is far less than inflation-adjusted income growth for other age groups over the same period – $ 2,900 for adults ages 35 to 44 and nearly $ 5,400 for adults ages 45 to 54.
When much of the minimum income is spent on rising housing and education costs, it is easy to write and pay back the daily living expenses on a credit card, which ultimately leads to an endless cycle of credit card debt.
However, Wilbert van der Klaauw, senior vice president at the New York Fed, said he was not sure whether the rise in loan recovery rates was due to the fact that certain cohorts of the population were not doing well or lending standards had become looser, Hayashi reports , The Fed is "investigating" it, he said.