The news: Total credit card balances totaled $881.23 billion in Q1 2024, a 10% year-over-year (YoY) increase, per data from the Federal Reserve.

• Balance growth is concentrating among fewer consumers: The number of new accounts increased just 1% over the same period.
• But a slight decrease in the total balances from the prior quarter shows that credit card debt is moving in the right direction.

Diving into delinquencies:

• The share of accounts that were 30+ days delinquent was 1.79% in Q1, down from 1.90% in Q4 2023.
• While it’s still higher than pre-pandemic levels (1.40% in Q1 2019), the quarterly decrease suggests consumer financial health is making headway.

The 90-day delinquency rate also began to moderate—but at a slower rate.

• The 90-day delinquency rate was 0.88% in Q1, slightly down from 0.89% the prior quarter.
• This is a positive sign as the 90-day rate tends to take longer to recover than the shorter ones.

Concentrating risk: Despite signs of delinquency progress, the share of balances that were delinquent increased quarter over quarter. This signals that while fewer accounts were delinquent than in Q1, consumers already behind on payments are sinking deeper into debt.

• The share of credit card balances that were delinquent in Q1 hit a 12-year high.
• 3.56% of credit card balances were 30+ days past due, up from 3.48% the prior quarter.
• And 1.86% of credit card balances were 90+ days past due, up from 1.72% the previous quarter.

What’s next? The buildup of balances and delinquencies is in part because of record-high interest rates.

Traders widely expect the Federal Reserve to cut rates by September, which should offer some relief to indebted consumers. But rates are expected to come down slowly, meaning it will likely take a while for consumers to see an impact on their finances.

Our take: While many consumers are improving their finances, for those that are still struggling, it’s only getting worse.

Credit card providers may need to start implementing programs that can help delinquent customers. They may also want to push more value-added services and other revenue streams to make up for slowing credit card account growth.