Credit Card Delinquencies Climb as Consumers’ Savings Dip

While the average American consumer remains “credit healthy,” some trouble spots are apparent.

The latest installment of VantageScore’s Credit Gauge shows delinquencies climbing across all tiers of credit — and for a range of credit products, including mortgages, credit cards, personal loans and auto loans.

“The tale of two consumers is becoming more pronounced,” Susan Fahy, Executive Vice President and Chief Digital Officer at VantageScore, said in a news release.

“This trend could complicate the Federal Reserve’s efforts to effectively engineer a smooth landing because VantageScore Superprime consumers are still spending and borrowing while VantageScore Subprime consumers are finding it increasingly difficult to stay current on credit payments.”

The report showed early-stage delinquencies rising from 0.98% in January to 1.04% in February, marking the first time that figure has exceeded 1.0% in four years.

New loan account originations fell in every category during February except for auto loans, which increased slightly “as high inventory levels drove incentives and promotions,” the news release said.

Personal loans were down the most, likely because of tighter lending requirements coupled with rising interest rates, VantageScore said.

VantageScore’s report arrived last week at the same time as the latest Personal Consumption Expenditures price index from the Bureau of Economic Analysis, which showed that while consumer spending in February was up 0.8%, personal income increased by just 0.3% in the same time frame.

At the same time, the personal saving rate in the February data stood at 3.6%, falling from 4.1% seen in January and down from recent peaks in the past year of roughly 5%.

“The implication is that consumers and households are drawing down their savings to pay for the goods and services they need,” PYMNTS wrote last week.

PYMNTS Intelligence data has found that 15% of consumers say debt accumulation was a main pressure point on their savings, as they have dipped into those accounts to ease their debt burdens. More than three-quarters of consumers said they had used up the bulk of their savings to cover a major expenditure at least once.

Separate economic data released last week by The Conference Board showed that consumers are at best mixed about their future spending plans, with just a small fraction of Americans saying they planned to spend on things like pet care, motor vehicles and travel.