> Credit card delinquency rates, which are seen as a precursor to write-offs, peaked in July, according to data from Moody’s, but have only fallen slightly and remain nearly a percentage point higher than they were on average in the year before the pandemic.<p>This is a prime example of a style of reporting that really grinds my gears.<p>The citation is clearly to another internet source, so a link should be provided. If it truly cannot be linked because it is private, more context is still needed to understand what this data means.<p>I actually can’t find the source myself, but I can find “Delinquency Rate on Credit Card Loans, All Commercial Banks” from the Federal Reserve. [1]<p>The percents from that source somewhat match those referenced in the FT quote. “Peaked in July”<p>- 2024Q1 3.15%<p>- 2024Q2 3.24%<p>- 2024Q3 3.23%<p>Using 2019 as “the year before the pandemic”, the average was 2.5825. Is +0.6475 “nearly a percentage point”? I guess it technically would round up.<p>Seemingly important context that the quote doesn’t give is that 3.23% is lower than <i>any</i> time 1991Q3 to 2011Q4. But, maybe the trend matters more for this metric.<p>[1] <a href="https://fred.stlouisfed.org/series/DRCCLACBS" rel="nofollow">https://fred.stlouisfed.org/series/DRCCLACBS</a>
Anecdotal but my spending habits changed a lot during lockdown and it's been an uphill battle to get them back to normal.<p>There was a period there where we were flush with valuable cash that you wanted to just spend, just for the dopamine hit in some cases, but also because you knew the cash was going to be worth less over time. Getting stimulus checks was a bit of a mindfuck too. We still shop almost exclusively on our phones, and it's so easy to just "add to cart" and have someone put it in my trunk or drop it at my doorstep.<p>Cut to a few years later and the cost of things has risen faster than my income and my brain is still "COVID rich", I can see why credit card balances are higher and defaults are more common.
This entire article seems to be completely based on a non-inflation adjusted write-off value. It is not surprising to me that we are setting write-off records. We were bound to at some point!<p>It is clear that delinquencies have ticketed up over the last year or two. But this article does not do a particularly good job about contextualizing if this is actually concerning.<p>Here is the actual rate:<p><a href="https://fred.stlouisfed.org/series/CORCCT100S" rel="nofollow">https://fred.stlouisfed.org/series/CORCCT100S</a><p>Pretty tough to look at that and determine if this clearly concerning or an moderate adjustment to a changing post-covid environment.
<i>XYZ metric is at its highest ever!</i><p>Is it adjusted for inflation and the rise in population in that period? (hint: it isn't)<p>10 seconds of simple math usually takes the steam out of the vast majority of such sensationalized headlines.
Doesn't seem to be much movement in mortgage defaults:
<a href="https://fred.stlouisfed.org/series/DRSFRMACBS" rel="nofollow">https://fred.stlouisfed.org/series/DRSFRMACBS</a>
Here is the NY Fed household data statistics on the subject. The NY Fed reports quarterly on US credit and debt. Aggregate delinquency rates going up.<p><a href="https://www.newyorkfed.org/microeconomics/hhdc/background.html" rel="nofollow">https://www.newyorkfed.org/microeconomics/hhdc/background.ht...</a>
I don't know if the article references credit card interest rates, but I think it's worth also including in the discussion.<p>The graph on this page illustrates how consumer credit card interest rates have skyrocketed, and how obscenely high it is relative to the Prime rate.
<a href="https://wallethub.com/edu/cc/historical-credit-card-interest-rates/25577" rel="nofollow">https://wallethub.com/edu/cc/historical-credit-card-interest...</a><p>I seem to recall that some years back the credit card interest rates were capped at a much lower rate than they are now.<p>Where this would lead us shouldn't be a surprise to anyone. And at a general level, many current systems in the US are on a clearly unsustainable trajectory. However this collapses, it's going to be really messy.
> Credit card delinquency rates... remain nearly a percentage point higher than they were on average in the year before the pandemic.<p>Just another journalist trying to scare you. All that happened is bad debt rose 1% compared to 5 years ago.