Swing-State Consumers Hurt More Than Most in Credit Card Squeeze

Household finances all over the US are feeling the pressure of high borrowing costs, and swing-state voters rank among the harder hit.

Credit card delinquencies are running above the national average in six of the seven states expected to be decisive in November’s presidential election, according to data from VantageScore. On some other key measures of financial strain, like the post-pandemic increase in rents, voters in election battlegrounds also tend to be in a tougher spot than most Americans.

There are signs that debt pressures have eased since the start of this year, and the Federal Reserve’s interest-rate cut last month signals more relief for borrowers, though perhaps not before Election Day. Consumer delinquencies aren’t especially high by historical standards but they’ve climbed steeply since early in the pandemic, when many Americans used government stimulus to clear debts.

All of this makes the strength of personal finances a crucial issue in the contest between former President Donald Trump – who’s seeking to play up the pain inflicted by high inflation and borrowing costs — and Vice President Kamala Harris, who points to gains in income, wealth and employment under the Biden administration.

How that debate plays out in the swing states could help tilt the balance in a close-run contest. Voters there generally rate Trump above Harris on managing the economy. When it comes to trusting a candidate to help with personal debt, Harris has a narrow lead.

“Voters are still feeling that pinch, they’re still feeling that economic stress and strain,” says Ashley Koning, director of the Eagleton Center for Public Interest Polling at Rutgers University.

Harris has been catching up with Trump when it comes to trust on economy, “but she hasn’t completely closed that gap,” Koning says. One advantage for Democrats is that some debt issues like student loans may disproportionately affect younger Americans, who typically don’t vote so often but lean toward Democrats when they’re motivated to turn out, she says.

Trump has drawn attention to the spike in delinquencies for credit cards and auto loans over the last couple of years. Speaking in swing state Michigan, he floated a plan to make interest on auto loans tax-deductible. Last month he touted a temporary cap on credit-card interest rates, an idea that’s struggled to get support in Congress in the past. Harris is promising subsidies for first-time homebuyers and measures to protect renters, as well as continuation of the Biden administration’s efforts to forgive student loans

Here’s a roundup of how the swing states – Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin – fare on some gauges of household debt and finances.

Credit Cards

Interest rates on US credit cards climbed to multi-decade highs above 20% as the Fed tightened monetary policy to rein in pandemic inflation. That has triggered growing difficulties with repayments, and an increase in early-stage delinquencies. The share of card payments across the US that are between 30 and 59 days past due jumped to 0.69% at the end of the second quarter, almost double the rate four years earlier, according to VantageScore.

In swing states, the numbers are higher: Except for Wisconsin, all of them posted delinquency rates above the national average. In that group, Pennsylvania saw the sharpest increase over the period, followed by Georgia and Michigan.

“Consumers in battleground states are still facing financial pressure” with delinquency rates higher than they were two years ago, though they’ve eased since the start of 2024, says Susan Fahy, executive vice president of VantageScore.

Auto Loans

More Americans are falling behind in their auto loan payments, and VantageScore’s data shows how the stress is spread across the country. The national average rate doubled from four years earlier, to above 2%.

Among the swing states, Georgia and North Carolina had auto delinquency rates significantly higher than the national average — putting indebted car-owners there at higher risk of having their vehicles repossessed — while in Wisconsin and Michigan they were lower.

Student Loans

Debt relief for student borrowers was a focal point of the Biden-Harris administration. While their main forgiveness plan was blocked by the Supreme Court, separate programs were rolled out to write down principal or cap repayments for some borrowers. Harris has vowed to continue the effort.

In four of the seven swing states, student borrowers have an average debt that is above the nationwide figure. The biggest gap is in Georgia, where the typical student debtor owes $6,000 more than the national average.

Borrowers who’ve failed to keep up with their student loan payments risk a hit to their credit scores in the coming months, with an amnesty for reporting delinquency on federally backed student loans poised to end.

For now, student-loan delinquency rates remain low by past standards after the pandemic freeze on repayments. Still, a study by WalletHub found that they rose in most states in the second quarter of this year – and among the 10 states to post the fastest increases, three were swing states: Michigan, North Carolina and Georgia.

Mortgages and Rent

Mortgages are a financial bright spot for many households that were able to lock in loans at low rates before the Fed hikes. The share of homeowners with a “seriously underwater” mortgage – meaning they owe 25% more than the home’s market value — dropped to a low of 2.4% last quarter, according to real estate data firm ATTOM. The swing states have tracked this trend, and three of them — Arizona, Nevada and North Carolina — are below the national average.

Swing-state renters have had a tougher time. Nationally, apartment rents have risen by some 22% since Covid hit, according to Apartment List, a rental marketplace. Apart from Pennsylvania and Georgia, the other five battleground states have all seen rent rising by more than that, with Wisconsin and Michigan posting the biggest increase.

In swing states the priority issue — beyond the economy in general — is the specific question of affordability, according to Frank Luntz, a longtime pollster and focus group expert.

“The greater the personal financial crunch, the more electorally potent affordability becomes,” he said.

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