Rising Credit Card Delinquencies: What to Do if You’re at Risk

The Federal Reserve Bank of New York has reported that seriously overdue credit card debt is at its highest level in over a decade, with individuals aged 35 and under facing the most challenges in paying off their bills. The share of credit card debt that is severely delinquent, meaning more than 90 days overdue, has risen to 10.7% in the first quarter of 2024, up from 8.2% a year ago.

Experts are advising those at risk of delinquency to seek help from nonprofit credit counselors and to negotiate directly with their creditors. Nonprofit credit counselors can assist in creating debt management plans with lower interest rates and single monthly payments. It is important to be cautious of for-profit debt consolidation companies that may charge higher fees.

The increase in delinquencies is attributed to factors such as the Federal Reserve raising interest rates to combat inflation, the end of pandemic-era aid programs, and stagnant wage growth. Younger and less affluent individuals are particularly vulnerable to falling behind on payments, with renters facing additional challenges.

It is recommended to know your credit score, keep up with payments, and avoid over-extending with “buy now, pay later” loans. The rise in credit card delinquencies is concerning as it may indicate a larger group of financially stressed consumers who could potentially fall into severe delinquency if the economy worsens.

In addition to the increase in credit card delinquencies, retail spending has stalled, with major companies like Walmart, Starbucks, and McDonald’s adjusting their sales expectations. It is crucial for individuals facing financial difficulties to seek assistance and explore options for managing their debt to avoid further financial strain.