As Credit Rises, So Do Delinquencies

The New York Fed issued a report earlier this month comparing various forms of household debt and credit. Credit card delinquencies crept up to 4.6% for the third quarter of 2017, although delinquencies remain well below the levels experienced during the recession of around 11% a little under a decade ago. With many Americans suffering from negative wealth, credit needs are likely to remain high in the coming months.

According to the NY Fed study, credit card balances grew by $24 billion over the past 3 months, and credit inquiries were also up for the third straight quarter. Along with growing credit use, the wealth gap between low- and high-earning households continues to widen. Credit must fill the gap between available wealth and household needs.

Many of the same families that are being left behind as the wage gap grows are the same families woefully underserved by banks and traditional financial institutions. Responsible financial service providers, like the members of NAFSA who offer short term, online installment loans, have an opportunity to serve the underserved credit community and help soften the blow of a financial policy that seems to be overlooking the vast majority of American families.