What to do if you’re at risk of rising credit card delinquencies

Rising Credit Card Delinquencies: What You Need to Know and How to Take Action

NEW YORK — The level of seriously overdue credit card debt has reached its highest point in over a decade, with individuals aged 35 and under facing the most challenges in paying off their bills.

According to the Federal Reserve Bank of New York, the share of credit card debt that is severely delinquent, meaning more than 90 days overdue, rose to 10.7% in the first quarter of 2024, up from 8.2% a year ago.

For those at risk of delinquency, experts recommend seeking help from nonprofit credit counselors and negotiating directly with creditors. Bruce McClary, senior vice president at the National Foundation for Credit Counseling, emphasizes the importance of reaching out for assistance as soon as possible. Nonprofit credit counselors can provide guidance and create debt management plans with lower interest rates and fees.

Martin Lynch, president of the Financial Counseling Association of America, echoes this advice, urging individuals to be forthcoming about their circumstances with counselors.

In addition to seeking help from nonprofit organizations, borrowers are encouraged to negotiate with credit card companies to explore options for lower interest rates and long-term payment plans. Most credit card companies have hardship programs available for those facing financial difficulties.

The increase in delinquencies can be attributed to factors such as high interest rates, the end of pandemic-era aid, stagnant wage growth, and rising rent costs. Silvio Tavares, CEO of VantageScore, notes that renters are particularly vulnerable to falling behind on payments.

While credit card delinquencies only make up a small percentage of consumer debt, the rise in delinquencies is concerning as it appears to be outpacing income growth. McClary warns that a worsening economy could push more consumers into severe delinquency.

As retail spending stalls and companies like Walmart, Starbucks, and McDonald’s adjust their sales expectations, it is clear that the financial challenges facing consumers are having a broader impact on the economy.

Overall, the increase in credit card delinquencies serves as a reminder for individuals to stay informed about their credit score, seek help when needed, and avoid overextending themselves financially.

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