The stocks of many consumer lending companies have been a bit dour, according to the Wall Street Journal. The rate for credit card delinquencies rose to 9.1% over the last year, which is the highest rate in over a decade. While delinquencies are up, so are the number of people who carry a credit card balance from month to month—except that now the interest rates are at 21.5%, up from 15% in 2019.
Banks report that low-income customers have generally been more careful in their spending, especially avoiding big purchases such as buying a home, yet the “charge-off” rates (when a lending institution considers a loan will never be repaid, it issues a “charge-off") is now higher than before the pandemic. This charge-off rate tells industry insiders that when a consumer gets into debt it is now harder to negotiate a way out of the problem.
Transportation is vital for consumers and generally a car loan is the one bill that customers continue to pay during financial difficulties, yet delinquencies for car loans are also at 8% over the last year, which is the highest it has been in a decade. The interest rates for new car loans have also gone up from 5.3% in 2019 to 8.2% today.
Meanwhile the cost of living has been soaring. In a separate report the Wall Street Journal details that baby wipes, bleach, cooking oil, deodorant, dog food, eggs, nutrition bars, and even ramen packages are all up over 50% in the last four years.
