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

Credit card delinquencies are on the rise, with seriously overdue debt reaching the highest level in over a decade. Young adults, in particular, are struggling to pay their bills, with the share of severely delinquent credit card debt rising 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. These counselors can provide free and non-judgmental advice, as well as help create debt management plans that lower interest rates, eliminate late fees, and consolidate payments. It’s important to be cautious of for-profit debt consolidation companies, as they often charge higher fees.

Negotiating directly with creditors is also recommended, as many companies have hardship programs available for those facing financial difficulties. By reaching out and being honest about your situation, creditors may offer more flexibility in terms of interest rates, fees, and payment plans.

The increase in delinquencies can be attributed to factors such as high interest rates, the end of pandemic-era aid, inflation, and rising rent costs. Younger and less affluent individuals are particularly vulnerable, and it’s crucial for borrowers to know their credit score and avoid over-extending themselves with “buy now, pay later” options.

While credit card debt only makes up a small portion of consumer debt, the rise in delinquencies is concerning as it appears to be outpacing income growth. As the economy faces uncertainties, it’s important for individuals to take proactive steps to manage their debt and avoid falling into severe delinquency.