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

Credit card debt is reaching alarming levels, with seriously overdue payments hitting a decade-high, particularly affecting those 35 and under. According to the Federal Reserve Bank of New York, the share of credit card debt that’s severely delinquent, defined as being more than 90 days overdue, rose to 10.7% in the first quarter of 2024, up from 8.2% a year ago.

Experts advise those at risk of delinquency to seek help from nonprofit credit counselors and negotiate 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 organizations can help create debt management plans with lower interest rates and no late fees.

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

The increase in delinquencies is attributed to high interest rates, the end of pandemic-era aid, and stagnant wage growth. Silvio Tavares, CEO of VantageScore, warns that renters and younger, less affluent individuals are particularly vulnerable to falling behind on payments.

As credit card delinquencies rise, retail spending has stalled, with companies like Walmart, Starbucks, and McDonald’s feeling the impact. The situation is concerning, as the increase in delinquencies appears to be outpacing income growth, potentially pushing more consumers into severe delinquency in the future.