💳 Maxed out

Reusable plastic… is getting a lot of use. Years of climbing prices and high rates have Americans increasingly relying on their credit cards. That’s not inherently bad, but one person’s travel miles are another person’s high-interest debt. A New York Fed report this week said that nearly one in five US cardholders is using at least 90% of their credit limit (aka “maxed out”). That’s far above the 30% rate experts recommend, and it's leading to more past-due bills: about 9% of card balances fell into delinquency last year. “Serious delinquencies” (90+ days late) hit their highest level since 2010.

• Age gap: Young people are more likely to max out their cards because of lower credit limits, student loans, and smaller paychecks. 15% of Gen Z is maxed out, compared to 12% of millennials and fewer than 5% of boomers.

• Imbalance: About 44% of borrowers roll their credit debt over month to month instead of paying in full. Making minimum payments at 20% interest would take 18 years to pay off the average balance of $6.2K.

• Fee’d up: Last week, a federal judge blocked a Biden-admin rule that would’ve capped credit-card late fees at $8 (some are as high as $30).

The tab runneth upward… Total US household debt rose by $184B last quarter, to $17.7T, as more price-pinched folks fell behind on bills. Delinquencies rose on both mortgages and car loans (by 40% and 19%, respectively). And other payment options like buy now, pay later (for example: Affirm, Klarna, Afterpay) are said to be adding to the debt burden: Bloomberg said 43% of BNPL users were behind on their IOUs.

Art breaker… Christie’s, the prestigious auction house, nearly had its big May sale disrupted by an apparent hack. Its website went down in the days leading up to the auction, causing folks to question how digital buying (which made up 18% of global art sales last year) would be affected. Even though the site remained down, online bidders were sent a special link to raise their digital paddles. But while the auction proceeded, any hype from the dramatic downtime failed to heat up the lukewarm market.

• Bidding snores: The second part of Christie’s auction — featuring usually popular contemporary pieces — fell flat. It was expected to tally between $104M and $155M, but brought in just $80M. And three works were withdrawn — likely a sign of low interest.

The canvas has shifted… Mid-pandemic, when even “Animal Crossing” paintings were a hot commodity (not to mention NFTs), art sales surged. But with today’s high interest rates and inflation, buyers want a discount, while sellers are reluctant to list for less. Last year, auction sales dropped 27% from 2022, the market’s first squeeze since 2020, and average prices plummeted 32%, the most in seven years. The rut continued this year, with May sales from the Big Three (Christie’s, Sotheby’s, and Phillips) expected to fall 18% annually.

• Different strokes: Auction houses say the sales slump isn’t a demand problem. Buyers are bidding, but owners are waiting for the economy to improve before listing their works.