during a period of decades-high inflation, as well as added pressure on younger borrowers and borrowers with lower income.Amid a still strong labor market with government assistance programs now largely gone, "it's clear" that debt trends are shifting back to previous rates, New York Fed researchers said.Credit card balances grew $38 billion from the second quarter, making up 11% of the overall increase in household debt .
Credit card holders between ages 30 and 59 have balances approaching fourth quarter 2019 levels, according to the report.Borrowers in the lowest income households have seen their balances surpass pre-pandemic levels as well. Meanwhile, delinquency rates, which have remained very low, are starting to climb among households with lower income.Credit cards are the most prevalent type of debt in the U.S. — and credit card balances represent a mix of past debt and new consumption.
New York Fed researchers note that they couldn't distinguish between borrowers who pay in full each month from those who roll over their balances.And the status of the White House's student loan forgiveness plan, which has been tied up in the courts. If it goes through, the researchers expect student loan delinquencies to be lower than they were pre-pandemic. If payments resume, younger borrowers may see greater credit pressures than older borrowers.
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