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The percentage of credit card balances that slid into delinquency rose to nearly 9% last quarter, a rate not seen in more than a decade, according to the New York Fed.

Patrick T. Fallon/Bloomberg

While some banks have suggested that their credit card businesses are through the worst of rising delinquencies, new data from the Federal Reserve Bank of New York indicates that defaults haven’t peaked yet, as the number of borrowers maxing out their cards approaches its pre-pandemic level.

U.S. credit card balances hit $1.12 trillion in the first quarter, which was down from the end of last year due to seasonal factors, but still above the $1 trillion-mark, topped for the first time in the second quarter of 2023. Additionally, the percentage of credit card balances that slid into delinquency rose to nearly 9% last quarter, a rate not seen in more than a decade.

Joelle Scally, a household and public policy research leader at the New York Fed, said in a prepared statement that the rise in borrowers missing credit card payments signals “worsening financial distress among some households.”

Delinquent credit card debt is disproportionately held by borrowers who are spending near the top of their credit limits, a demographic that has been steadily growing, according to the New York Fed’s analysis of recent data. Utilizing a larger percentage of available credit can indicate that the borrower has a tight cash flow or a lower credit limit, both of which are more prevalent among low-income and younger populations.

Last quarter, the percentage of credit card debt that became “seriously delinquent,” defined as at least 90 days late, hit 6.86% after sitting at around 3% just two years ago, the New York Fed found.

Total household debt increased by 1.1% last quarter to $17.69 trillion, according to the report. That total includes balances across other consumer borrowing categories like mortgages and auto loans.

Patches of consumer stress don’t appear to be setting off alarms at major credit-card issuing banks. Banks have been sticking to their cautiously optimistic view that credit quality is “normalizing” back to pre-pandemic levels as the low unemployment rate has held strong, and as the pace of increase in delinquencies has slowed, said Ted Rossman, a senior credit card analyst at Bankrate.

“The picture is not all rosy for everybody, but I think the big picture is still pretty positive,” Rossman said. “It’s pockets of trouble at the individual level. … In general, it’s actually been a favorable environment for banks and card issuers.”

JPMorgan Chase Chief Financial Officer Jeremy Barnum said on the company’s first-quarter earnings call that net charge-offs on the bank’s cards were driving up credit costs, but that those numbers were “close to normalized” after historical pandemic-era lows.

And Capital One Financial CEO Richard Fairbank indicated recently that the McLean, Virginia-based company believes that credit trends in its card business are stabilizing.

“I’d say consumers are in pretty strong shape relative to historical benchmarks,” Fairbank said on the company’s earnings call last month. “So in terms of Capital One’s performance, we continue to see a settling out. We believe that for Capital One, I can’t speak for all card issuers, but we definitely have seen what we think is sort of a landing.”

Rossman said that despite some “strong fundamental” signs for banks, he’s seen some indicators that consumers are pulling back in an effort to manage their debt amid high interest rates and inflation.

“The phrase everybody keeps using is, ‘Consumers are hanging in there,'” he said. “It does feel like something’s starting to change a little bit, like the belt-tightening might be getting a little more pronounced.”

Citigroup CFO Mark Mason said last month that he expected credit card performance would “normalize” more in the second quarter and in 2025. Changes in unemployment, inflation and interest rates will factor into Citi’s future credit losses, he added.

Mason also said that, as previously expected, the number of Citi cardholders who carry debt month-to-month is back to pre-pandemic levels.

“We are seeing continued revolver activity, which you’d expect given the way the cycle has evolved and given payment rates have started to moderate and the stimulus has unwound,” Mason said on Citi’s most recent earnings call.

Kevin Wack contributed to this story.