Some Americans have become saddled with credit card debt as rent and everyday prices remain high

NEW YORK (AP) — While the U.S. economy is broadly healthy, pockets of Americans have run through their savings and run up their credit card balances after battling inflation for more than two years.

Experts worry that members of these groups — mostly lower- and middle-income Americans, who tend to be renters — are falling behind on their debts and could face further deterioration of their financial health in the year ahead, particularly those who have recently resumed paying off student loans.

“The U.S. economy is currently performing better than most forecasters expected a year ago, thanks in large part to a resilient consumer,” wrote Shernette McLoud, an economist with TD Economics, in a report issued Wednesday. “However, more recently that spending is increasingly being financed by credit cards.”

Americans held more than $1.05 trillion on their credit cards in the third quarter of 2023, a record, and a figure certain to grow once the fourth-quarter data is released by Federal Deposit Insurance Corp. next month. A recent report from the credit rating company Moody’s showed that credit card delinquency rates and charge-off rates, or the percent of loans that a bank believes will never be repaid, are now well above their 2019 levels and are expected to keep climbing.

These worrisome metrics coincide with the average interest rate on a bank credit card of roughly 21.5%, the highest it’s been since the Federal Reserve started tracking the data in 1994.

“The reality is that there are starting to be some significant signs of stress,” said Silvio Tavares, president and CEO of VantageScore, one of the country’s credit scoring systems.