Why credit card delinquencies are rising for high-income consumers

By the numbers: Credit card delinquencies for high-income consumers are ticking up.

• The 30-day credit card delinquency rate in October was 0.38% for those making $150,000 or more, per VantageScore. This is up from 0.33% a year ago.
• The 60-day delinquency rate for this segment was 0.20%, an increase from 0.16% in October 2023. 60-day delinquencies have jumped 67% from January 2023.

But these rates are still well below average.

• The 30-day rate across all consumer segments was 0.78% in October. This is a slight increase from the prior month (0.77%) and flat on the year.
• The 60-day delinquency rate was 0.46%, slightly up from 0.45% in September and 0.42% in October 2023.

Why this matters: Higher-income consumers have so far been a bulwark of financial health. They haven’t felt the brunt of inflation as acutely as lower-income consumers. But this delinquency trend shows that they are feeling financial strain as well.

A few factors may be contributing to this:

• Pandemic-era savings are gone. US households’ pandemic-era savings ran dry in March 2024, per the San Francisco Federal Reserve, eliminating a cushion many consumers relied on.
• Revenge spending has turned into “doom spending.” Many consumers are using shopping splurges to cope with stress about the economy and politics—despite their lack of excess savings.
• High-paying jobs are few and far between. While the unemployment rate remains low at 4.1% as of October, hiring for high-paying jobs is at a standstill. Consumers who have been laid off, in the tech industry in particular, are struggling to find work in what some are calling a “white-collar recession.”

The bigger picture: Holiday shopping could worsen this trend. More than one-fourth (27%) of US consumers plan to take on debt to get through the holiday season, per a Bankrate survey.

This may lead to a buildup of credit card balances that can be hard to pay down given record-high credit card interest rates.

Our take: While credit card debt and delinquencies may continue to grow for higher-income consumers as a result of the holiday season, this trend shouldn’t worry credit card issuers just yet. Even if they rise, delinquencies for this segment will still be well below the average.

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