(Bloomberg) -- American households took on more debt at the end of last year, and some of those loans are increasingly going bad, according to data from the Federal Reserve Bank of New York.

Although overall US delinquency rates remain below pre-Covid levels, those for credit cards and auto loans are now higher. About 8.5% of credit card balances and 7.7% of auto loans moved into delinquency in the fourth quarter, the bank said in a report Tuesday.

“Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed. “This signals increased financial stress, especially among younger and lower-income households.”

Household balance sheets have been worsening in the last two years since the end of stimulus payments as well as forbearance on mortgages and student loans. Americans have been tapping into their savings and running higher credit-card balances to support spending, and increasingly they’re struggling to maintain that debt with higher interest rates.

Credit-card balances increased in the fourth quarter to $1.13 trillion, while there’s now $1.61 trillion of auto loans outstanding, both the highest in data back to 2003. Mortgage debt — the largest category — also hit a fresh record, while student loans were little changed.

In particular, consumers aged 30 to 39 are struggling with delinquencies on credit-card debt, possibly because they’re contending with student loans as well, the researchers said. However, missed student-debt payments won’t be reported to credit bureaus until later this year, thanks to a leniency program from President Joe Biden’s administration.

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While the proportion of consumers indicating a debt collection service is trying to obtain a payment has been declining in recent years, the average collection amount is generally on the rise. The share of credit-card balances that were at least 90 days delinquent approached 10% at the end of 2023, rising more than two percentage points in a year.

In the five years leading up to the pandemic, the amount borrowed for an auto loan increased by less than 1% per year, the New York Fed said. But in 2021, when car prices skyrocketed, the average amount of a newly originated loan rose by 11%, followed by another 10% in 2022 to an average amount of nearly $24,000.

Even though car prices and new loan amounts have been falling in the past year, higher interest rates have kept monthly payments elevated and led to more consumer distress, the researchers said.

Aggregate US household debt balances increased by $212 billion in the fourth quarter of 2023 to $17.5 trillion. More than half the gain was driven by mortgage debt and almost a quarter was from credit cards, according to the New York Fed. 

Home equity line of credit balances jumped $11 billion as borrowers chose to tap into existing equity rather than refinancing mortgage rates. Although the interest rates on HELOCs are high, many consumers don’t want to give up their low mortgage rates, the researchers said.

The New York Fed’s Household Debt and Credit Report provides insight into the credit conditions and activity of US consumers based on a nationally representative sample drawn from anonymized Equifax credit data.

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