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As delinquencies continue to rise, the New York Fed's latest Quarterly Report on Household Debt and Credit exposes a worrying trend in credit card delinquencies. Many borrowers, particularly younger individuals, are nearing or exceeding their credit limits, with over 15% of Gen Z borrowers already maxed out. This trend of maxed-out borrowers is a cause for concern as it contributes to rising delinquency rates in credit card balances. The correlation between high credit utilization and future delinquencies is strong, with about a third of balances held by maxed-out borrowers going delinquent in the past year. As credit card delinquencies have surpassed pre-pandemic levels, especially driven by maxed-out borrowers, it underscores the importance of monitoring these trends closely. Younger generations and borrowers in low-income areas are particularly vulnerable to being maxed out, highlighting potential cash flow constraints. Financial institutions must be vigilant about these developments to mitigate the risk of further delinquency increases and promote sustainable borrowing practices. As credit card delinquencies continue to rise, the financial well-being of households, especially those with limited incomes and younger generations, is at stake, which is why what we're building at Remynt is vital. As consumers transition toward delinquency, they will need help climbing out of debt, rebuilding, and accessing tools to help them be better stewards of credit moving forward. #CreditCardDelinquencies #MaxedOutBorrowers #FinancialWellBeing #CreditCards #Debt #Delinquencies #GenZ [citation:1]??https://lnkd.in/gYXym4Dp

US Credit Card Defaults Soar to Post-2008 Highs: What It Means for the Economy The latest data from?BankRegData?paints a stark picture: defaults on US credit card loans have reached levels unseen since the 2008 financial crisis. Here's what you need to know about this alarming trend and what it could signal for the broader economy: Record Defaults In the first nine months of 2024, credit card lenders wrote off?$46 billion?in seriously delinquent loan balances. This figure marks a?50% increase?from the same period in 2023 and represents the highest write-off level in 14 years. What a Write-Off Means A write-off occurs when lenders deem a debt "unrecoverable," signifying that borrowers are unlikely to repay. Impact on Consumers Lower-income households are bearing the brunt of this trend, struggling under the weight of cumulative inflation and rising living costs. Potential Implications for the Economy Economic Slowdown High default rates may indicate that consumers are reaching their financial limits, potentially leading to a slowdown in consumer spending—a critical driver of the US economy. Lower Inflation Reduced spending power could contribute to lower inflation, as demand for goods and services weakens. Declining Mortgage Rates? If economic conditions cool, the Federal Reserve may adjust its policies, potentially paving the way for lower mortgage rates—a silver lining for homebuyers and homeowners. What Can Consumers and Homeowners Do? Consolidate Debt:?Homeowners might consider leveraging home equity to consolidate high-interest credit card debt into a lower-rate loan. Budget and Prioritize:?In uncertain times, focusing on essential expenses and creating a financial buffer is critical. Plan for Opportunities:?If mortgage rates decline, it could open doors for refinancing or homebuying at a more favorable rate. Looking Forward While the rise in credit card defaults is concerning, it serves as a reminder of the importance of financial planning and resilience. For those in a position to act, strategic decisions today can lead to better financial stability tomorrow. Need guidance on navigating these changes??#justcallwilliam?at?630-881-8655?for personalized advice and solutions tailored to your financial situation. #EconomicTrends #CreditCardDefaults #InflationImpact #MortgageRates #FinancialPlanning

?? Most Common Financial Mistakes Many people struggle with money. Though a difficult economy and sociocultural factors may be to blame, you can still do your part to try to make smart choices with your money. Here, we'll take a look at some of the most?common financial mistakes?that can lead people to economic hardship. ?? Spending Too Much on Your Home When it comes to buying a home, bigger is?not necessarily better. Unless you have a large family, choosing a 6,000-square-foot home will only mean more expensive taxes, maintenance, and utilities. Before you buy a home, consider the carrying and operating costs beyond your monthly mortgage payment. Do you really want to put such a significant, long-term dent in your monthly budget? As you consider your housing arrangement, think through what's important to you. For example, how passionate are you about having a large yard? If it's at the top of your list, that's fine. Just be mindful that upkeep and maintenance may cost you in the form of hiring services, buying machinery, complying with HOA requirements, and paying for various home repairs that arise. ?? Misusing Home Equity Refinancing and taking cash out of your home means giving away ownership to someone else. In some cases, refinancing might make sense if you can lower your rate or if you can refinance and pay off higher-interest debt. However, the other alternative is to open a?home equity line of credit?(HELOC). This allows you to effectively use the equity in your home like a credit card. This could mean paying unnecessary interest for the sake of using your?home equity?line of credit. ?? Not Saving The U.S. household personal?savings rate?was just 3.6% in April 2024. Many households live?paycheck to paycheck—and there's no sign of improvement. Unfortunately, this puts people in a precarious position—one in which every dollar matters, and even one missed paycheck would be disastrous. This is not the position you want to find yourself in when an economic recession hits.? Many financial planners will tell you to keep three months' worth of expenses in an?emergency fund?account where you can access it quickly. Loss of employment or changes in the economy could drain your savings and place you in a cycle of debt paying for debt. A three-month buffer could be the difference between keeping or losing your house. ?? Contact us for more! #investment #investmenttips #investmentbanking #onlinebanking #turkishbanks #turkishbankuk #uk #finance

#thegreatreckoning...I expect our federal deficit will double from the $2 trillion this year, and the interest portion of the debt to reach $1.25 trillion by year end...~r ...I wonder if the banks are adequately providing for anticipated bad debt? Consumer stress has intensified, with an escalating share of credit card holders making only minimum payments on their bills, according to a Philadelphia Federal Reserve report. In fact, the share of active holders just making baseline payments on their cards jumped to a 12-year high, data through the third quarter of 2024 shows. The level rose to 10.75% for the period, part of a continuing trend that began in 2021 and has accelerated as average interest rates have soared and delinquencies also have accelerated. The increase also marked a series high for a data set that began in 2012. Along with the trend in minimum payments came a move higher in delinquency rates. The share of card holders more than 30 days past due rose to 3.52%, an increase from 3.21%, for a gain of more than 10%. It also is more than double the delinquency level of the pandemic-era low of 1.57% hit in the second quarter of 2021. The news counters a general narrative of a healthy consumer who has kept on spending despite inflation hitting a more than 40-year high in mid-2022 and holding above the Fed’s 2% target for nearly four years. Average credit card rates have climbed to 21.5%, or about 50% higher than three years ago, according to Fed data. Investopedia puts the average rate even higher, at 24.4%, noting that so-called low-cost cards that are given to borrowers with poor or no credit history have topped 30%. Consumers haven’t gotten any help from the Fed: Even as the central bank cut its benchmark interest rate by a full percentage point last year, credit card costs remained elevated. Those rates are hitting much higher balances, with money owed on revolving credit swelling to $645 billion, up 52.5% since hitting a decade low of $423 billion in the second quarter of 2021.. Renter noted that an increasing number of respondents — now at 48% — to the firm’s own consumer survey reported using credit cards for essentials. Moreover, the NerdWallet survey also found an even higher level, more like 22%, saying they are only making minimum payments. With average credit card balances at $10,563, it would take 22 years and cost $18,000 in interest when just paying the minimum. The trend in that direction is not encouraging. A recently released New York Fed survey for December found that the average perceived probability for missing a minimum debt payment over the next three months stood at 14.2%, tied with September for the highest since April 2020.

As I mentioned in one of my prior posts today, the percentage of Americans with a past due credit card has jumped and now sits at the highest level since 2012. This can't be good news for the macro-American economy, especially given the fact that total credit card debt in the United States today is at a record level of over $1.35 trillion. According to data published by the Federal Reserve Bank of Philadelphia, 2.6% of the total outstanding balances due on credit cards in the United States are now past due 60 days or more. This new level of delinquency is even more concerning when you consider that this is more than double the 1.1% recorded in 2021. But it's not just 60 days past due balances that have jumped. The share of credit card balances 30 days and 90 days past due also climbed in the first three months of the year to the highest levels in data back to 2012. And given the fact that most if not all Americans have now?burned?through the excess savings accumulated during the pandemic, this is a bad sign that worse levels of bad credit card outstandings are just around the corner. There is no reason to doubt or question the integrity of the Federal Reserve data. The Philly Fed data is drawn from the country’s largest financial institutions. Their report also showed that mortgage originations were at their lowest level since the Philadelphia Fed started publishing the data, as the high cost of housing and elevated mortgage rates damped consumer appetite. Source: ? Bloomberg, 2024. All Rights Reserved.

Consumer Credit: A Sign of Financial Stress Amid Market Recovery In June, US consumer borrowing increased by $8.9 billion, a figure that fell short of the $10 billion forecasted by economists. This modest rise reflects smaller credit-card balances, marking a notable decline in revolving credit by nearly $1.7 billion—the most significant drop since early 2021. In contrast, non-revolving credit, including auto and student loans, saw a substantial increase of $10.6 billion, the highest in a year. Despite this decline in revolving credit, Americans continue to rely heavily on credit cards and other forms of financing as wage growth slows, pandemic savings deplete, and inflation remains high. These trends are exacerbating financial stress, particularly for lower-income households. A recent report from the Philadelphia Fed highlighted a record high in credit-card balances past due, while VantageScore data indicated that delinquency rates for auto loans and credit cards have surpassed pre-pandemic levels. The broader economic landscape offers a mixed picture. On one hand, the stock market showed signs of recovery today, with the S&P 500 and Nasdaq surging by approximately 1.6%, fueled by positive jobless claims data that eased recession fears. Tech stocks, in particular, led the charge, with companies like Nvidia seeing significant gains. On the other hand, persistent high interest rates continue to challenge consumer spending and financial stability. The impacts on businesses and consumers are significant. For consumers, the reliance on credit amidst high interest rates can lead to increased financial strain, particularly as delinquency rates rise. This financial stress may curb discretionary spending, affecting sectors that depend on consumer purchases, such as retail and services. For businesses, especially those in credit-sensitive industries, rising delinquencies and cautious consumer behavior could translate to slower growth and increased default risks. As consumer spending is a primary driver of US economic growth, the Federal Reserve will closely monitor household finances in its upcoming policy meeting. The central bank is expected to consider lowering borrowing costs, especially after recent labor data indicated weaker-than-expected performance, triggering market expectations for a significant rate cut next month. At Havas Edge, we continuously track these economic indicators to provide our clients with actionable insights. Our goal is to help brands navigate these complex economic landscapes and connect with consumers effectively, even during challenging times. #EconomicUpdate #ConsumerCredit #FinancialStress #MarketRecovery

Delinquencies are on the rise! Here is a summary of the Yahoo article. Austan Goolsbee, President of the Chicago Federal Reserve Bank, recently highlighted consumer delinquencies as one of the most concerning economic indicators. His warnings have proven accurate as new data from the first quarter of 2024 show a significant increase in delinquency rates. The Federal Reserve reports that 3.2% of outstanding debt was in some stage of delinquency by the end of March, reflecting a rise in financial distress among consumers. Transition rates into delinquency have surged across all debt categories, with notable increases in credit card and auto loan delinquencies. Joelle Scally from the New York Fed confirmed that serious delinquency rates for credit cards and auto loans continued to rise across all age groups. While the Federal Reserve has not pinpointed a single cause, several contributing factors have been identified. Causes for Rising Delinquencies: - Post-Pandemic Spending and Savings: Increased spending and reduced savings post-pandemic have led many consumers to rely more on debt. - Lending to Lower Credit Score Borrowers: There has been an increase in lending to borrowers with lower credit scores, contributing to higher delinquency rates. - Economic Uncertainty: Various economic pressures and uncertainties may be exacerbating financial distress among consumers. As this situation develops, it is crucial for policymakers and financial institutions to closely monitor these indicators and take proactive measures to prevent further economic deterioration. https://lnkd.in/gBkeGnDE #credit #finance #delinquency #Fed #economy

?? Not all honky dory with US consumers ?? A record share of Americans ???? only paying the minimum on their credit card bills ?? Revolving credit card balances being the highest in 12 years ?? Credit card delinquencies more than double the lows during Covid Could this be the canary in the coal ?? mine? A major risk for the US economy going forward? "Americans are rolling over an ever-larger share of their credit card debts even with interest rates near multi-decade highs, a sign of growing strain on consumer finances, according to a new report by the Federal Reserve Bank of Philadelphia. Revolving card balances in the third quarter of last year surged to the highest level since at least 2012 when the series began, according to data published Wednesday by the Philly Fed covering loans by large banks. The share of borrowers who are only making the minimum payments was also the biggest on record. Put simply, amid higher prices and financing costs, Americans are racking up bigger balances — but paying o? less. The numbers point to one of the risks for a buoyant US economy, as consumers rely on credit to maintain the spending that drives growth. Typical rates on credit-card borrowing are close to the highest on record — above 2??1??% — and more and more borrowers are struggling to keep up. In an interview with Bloomberg in Davos on Wednesday, Raghuram Rajan — a former chief economist at the International Monetary Fund — cited a pickup in credit-card delinquencies as among the “things gnawing at the edge” of the US economy. US consumers had revolving card balances of $645 billion with the large banks in the Philly Fed survey, up by more than 50% from a post-pandemic low in the second quarter of 2021. The delinquency rate has risen too, with some 3.5% of card balances past due by 30 or more days and 1.8% of accounts delinqent. Both figures are more than double the post-pandemic lows recorded in 2021. For about one-tenth of credit-card users, the utilization rate for their cards is close to 95%, meaning that any further spending is increasingly perilous. The prospect of relief on interest rates is also becoming more remote, with US Treasury yields staying higher amid reduced expectations of further cuts by the Fed. In response to the credit strains, there are signs that banks are becoming more conservative and limiting new card origination o?ers. The Philadelphia Fed’s survey covers banks with at least $100 billion of assets." (Reporting for Bloomberg: Alex Tanzi) (+++Opinions are my own. Not investment advice. Do your own research.+++) Don’t want to miss my posts? Set the bell ?? next to my profile picture to 'All' and you'll be notified when I post. ??

Very interesting, alarming, and eye-opening write up. This piece in particular is very scary "For about one-tenth of credit-card users, the utilization rate for their cards is close to 95%, meaning that any further spending is increasingly perilous."