Balance: Consumers did something unusual in Q1, they didn't pay down their credit card debt

5/16/23 8:00PM

WE O U $17T

‍The New York Fed recently released its first-quarter report on household debt, revealing that American households now owe someone a staggering $17 trillion.

The majority of that is tied up in home mortgages, with the remainder split across student loans, car loans and credit cards — with the latter, and smallest of those 3 categories, particularly striking.

Credit card debt remained at a record level of $986 billion, defying the usual trend of post-holiday debt reduction. Indeed, this is the first time in over two decades that credit card balances haven't decreased in the first quarter — a period when many cut back on spending after the holiday period of October-December.

All told, credit card debt rose 17% in the last 12 months, a potential sign that consumers are turning to credit cards to cope with mounting daily expenses as inflation continues to bite. Another concern are the rising delinquency rates, with ~4.6% of credit card debt transitioning into "serious delinquency" — where debt remains unpaid for 90+ days — up from just 3% during the same period last year.

‍Save to spend

‍This current situation stands in contrast to the pandemic, when US consumers, buoyed by stimulus checks and lockdown savings, managed to pay off $160bn of credit card debt between the end of 2019 and March 2021.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.