One major way U.S. credit-card debt is getting worse

Americans are increasingly delinquent on their credit-card debt.

Credit-card delinquencies have increased this year, according to a new report released this month by the New York Federal Reserve.

Some 4.6% of credit-card debt became 90 or more days delinquent in the third quarter, up from 4.4% in the second quarter of 2017; it was lower in the second quarter of 2016, just 3.5%. This compares to rates between 8% and nearly 11% during the peak of the recession. “We will closely monitor the degree to which this uptick is predictive of further consumer distress,” said Andrew Haughwout, senior vice president at the New York Fed, earlier this year. Credit card balances also increased by $24 billion for the quarter, the New York Fed found.

This wasn’t the first evidence that Americans have been taking on more credit card debt. The country also hit a scary milestone earlier this year: Americans now collectively have the most outstanding revolving debt — often summarized as credit card debt — in U.S. history, according to a report released this month by the Federal Reserve. Americans had $1.021 trillion in outstanding revolving credit in June 2017. This beats the previous record in April 2008, when consumers had a collective $1.02 trillion in outstanding credit revolving credit.

“This record should serve as a wake-up call to Americans to focus on their credit card debt,” said Matt Schulz, a senior industry analyst at CreditCards.com, a credit card website. “Even if you feel your debt is manageable right now, know that you could be one unexpected emergency away from real trouble.”

Why is credit-card debt increasing?

Revolving credit has been growing at an annual growth rate of 4.9%. One reason: More consumers are getting access to credit cards backed by major banks and issuers in recent months. More than 171 million consumers had access to those cards in the first quarter of 2017, the highest number that has had access since 2005, when about $162.5 million people had access.

For the first time since the Great Recession, lenders have given more consumers with sub-prime, or below average, credit scores, access to credit cards, but they are giving them lower spending limits, according to the credit reporting agency TransUnion TRU, -0.54%

There has also been an increase in the aggregate credit limits on credit cards, but higher-credit score borrowers, who have a greater likelihood of paying their debts back, have seen the largest increase in their limits, the New York Fed found.

Lending to people who are unlikely to pay debts back can have disastrous effects, from keeping families in debt for years to ruining their credit scores, which makes it more difficult for them to borrow responsibly in the future.

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