In a surprising twist, America's richest and poorest ZIP codes reported a spike in credit card delinquencies—suggesting that Americans are racking up debt beyond their means across all income levels.

According to data from the St. Louis Fed, credit card delinquencies in the richest 10% of ZIP codes spiked from 4.8% in the second quarter of 2022 to 7.4% in the first quarter of 2024.

That’s a 54% jump—higher than any other income group.

By comparison, delinquencies in the poorest 10% of ZIP codes increased from 14.9% in the third quarter of 2022 to 21% in the first quarter of this year.

Report authors Juan M. Sanchez and Masataka Mori said that rising delinquencies are likely a result of the end of Covid stimulus programs, but that doesn't tell the whole story.

“[P]resent levels of credit card delinquency are greater than pre-pandemic levels, suggesting that a trend which began prior to the pandemic has accelerated,” they explained.

The Fed’s Survey of Consumer Finances found that 51% of households have credit card debt.

Higher-income Americans should be in a better position to pay off debt and understand the significance of doing so. But as it turns out, higher earnings don't always translate to financial prudence.

Lifestyle creep is real

Many Americans are falling prey to "lifestyle creep" or "lifestyle inflation," terms that describe a situation when people start spending more as their income grows.

Clinical psychologists say lifestyle creep is a real problem because people associate higher earnings with a reward mechanism in their brains.

“People hold these benchmarks in their mind: if I reach this position or I get this promotion or I make it to this age, then I can live this life, or then I deserve to have these things,” said Sabrina Romanoff, a clinical psychologist specializing in financial stress.

“Then they kind of go a little crazy or go a little wild on it, and then it becomes like a trade-off like they only can enjoy their present happiness and they’re not able to save or plan for the future,” she explained.

The end result is that even people earning six figures live paycheck to paycheck and rely on credit cards to fill the gaps.

A 2023 report by LendingTree found that more than half of Americans earning at least $100,000 a year live paycheck to paycheck.

Meanwhile, a recent poll commissioned by the National True Cost of Living Coalition found that a sizable share of higher-income households are under financial stress.

Like lower-income Americans, families earning more than $150,000 a year still worry about saving enough or having enough money to pay for emergency expenses.

“With high housing costs and food inflation, just getting by can be a challenge,” regardless of income level, said Dr. Ackert of Kennesaw State University.

“Plus, we must recognize that many Americans are burdened with student loans, credit card debt, and medical expenses.”