US household debt dips in Q2 as delinquency rate falls

US household debt balances and delinquency conditions improved modestly in the second quarter.

The Federal Reserve Bank of New York released its second-quarter household debt and credit report Tuesday, showing total US household debt stood at $18.8 trillion (approximately 26,560 trillion won) as of the end of June, down $13 billion (approximately 18.3 trillion won) (0.1 percent) from the previous quarter.

The share of total household debt more than 30 days past due came in at 4.7 percent, down 0.1 percentage point from the prior quarter.

The New York Fed said the transition rate into early delinquency rose for auto loans and mortgages but remained broadly stable for credit cards and other debt. The transition rate into early delinquency is a leading indicator of household fiscal health, measuring the share of loan accounts that move from current repayment status into short-term delinquency within a given period.

Total credit card balances at the end of the second quarter reached $1.26 trillion (approximately 1,780 trillion won), up $21 billion (approximately 29.6 trillion won) from the previous quarter. The share of credit card balances more than 90 days past due edged down to 12.9 percent from 13.1 percent in the prior quarter, though the level is still considered elevated. That serious delinquency rate has climbed sharply from 7.6 percent in the third quarter of 2022.

New York Fed researchers published a separate blog post Tuesday analyzing the factors behind the rising share of credit card balances 90 or more days past due, attributing the trend to lenders keeping derogatory credit records on file for longer periods. "A more accurate indicator of current consumer repayment behavior is the flow into delinquency rate," the researchers said, adding that this measure "has remained relatively stable for two years."