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Brian Chappatta

Millennials Are Helping to Sound the Credit Card Alarm

Young Americans have fallen seriously behind on their payments, adding to angst about the true health of U.S. consumers.

A long economic expansion disguises some risky borrowers.

A long economic expansion disguises some risky borrowers.

Photographer: Daniel Acker/Bloomberg

The U.S. credit card industry might be in a battle on two fronts.

First, the charge-off rate among card issuers in the first quarter increased to the highest level in almost seven years. The figure is effectively a gauge of “bad debt” — it reflects the percentage of loans companies have concluded will never be repaid. As Bloomberg News’s Jenny Surane noted last month, executives like Capital One Financial Corp. CEO Richard Fairbank chalked that up to the length of this economic expansion causing some negative credit events during the financial crisis to disappear from credit bureau reports, essentially making risky borrowers look stronger.