Slightly more than half of U.S. households held credit card debt in a recent analysis of Federal Reserve Bank of St. Louis consumer data, but that debt isn't evenly distributed.

Research on the 2022 Survey of Consumer Finances (SCF) conducted by the St. Louis Fed found that households headed by people with lower income are disproportionately burdened by credit card debt.

Lower-Income Households Hit Hardest

The consumer study—conducted by the Fed every three years on a cross-sectional sample of U.S. households—suggests those with credit card debt are concentrated in the middle of the income distribution, where they may have relatively easy access to credit cards but might be forced to borrow to cover 澳洲幸运5官方开奖结果体彩网:emergency expenses.

However, those at the bottom of the income distribution tend to have higher credit card 澳洲幸运5官方开奖结果体彩网:debt ratios compared with their monthly income because they may have less cash and savings and fewer choices of lower-interest-rate loans.

Delinquency Growing With Balances

According to the Quarterly Report on Household Debt from the New York Fed released last week, credit card balances in the first quarter of 2024 grew by $184 billion, or 1.1%, over the previous quarter to $17.69 trillion. 

Since the fourth quarter of 2021, delinquency has been steadily rising for all debt other than student loans. Delinquencies on credit cards, in particular, have increased beyond pre-pandemic levels. The trend conꦕtrasts sharply with two to three years ago when federal stimulus money was available and was used to ⛦pay down household debt.

Credit Cards Have Become an Emergency Fund

Many factors contribute to missed credit card payments, including forgetfulness, cash flow constraints, and income loss. According to the St. Louis Fed data, households with balances on credit cards were paying, on average, $180 per month on their credit card debt—a significant monthly burden for low-꧃income households.

The 澳洲幸运5官方开奖结果体彩网:relatively high interest rate on this type of debt makes it an expensive form of borrowing. This debt burden may grow even larger if credit card interest rates continue to rise.

However, higher rates may not deter consumers from using credit cards. The St. Louis Fed researchers found that credit cards have become an 澳洲幸运5官方开奖结果体彩网:emergency fund for many Americans.

A 2023 Federal Reserve report found that just 54% of adults had set aside money for three months' expenses in an emergency or "rainy day" fund. About a third of respondents in that survey said they couldn't cover three months of expenses in any way.