Credit card delinquency rate is the highest in 10 years. Here’s what this means for you:

A growing number of Americans are having trouble paying their credit card bills, according to new Federal Reserve data. During the pandemic, many Americans were able to save money and pay off credit card debt. But over the past few years, with rising prices, “revenge spending” and depleted savings accounts, some Americans have begun to struggle with credit card delinquency. The percentage of credit card balances that are more than 30 days past due is at the highest level in 10 years.

A recent survey by the Federal Reserve Bank of Philadelphia found that credit card delinquency rates have increased above pre-pandemic levels. When people are unable to repay credit cards and fall behind on payments, it is a sign of financial stress.

As of the third quarter of 2023 (latest data available), delinquent credit card balances are approximately:

• If your payment is overdue by more than 30 days: 3.2%
• If your payment is overdue by more than 60 days: 2.2%
• If your payment is overdue by more than 90 days: 1.5%

If your credit card balance is delinquent, it can take a huge toll on your credit rating. Being 60 or 90 days behind on a credit card can be a sign that something is seriously wrong with your personal finances. But even if you don’t fall behind on your credit card payments, the fact that many other U.S. credit card borrowers are struggling may affect your credit.

Let’s take a look at how rising credit card delinquencies can affect your ability to borrow, and how you can continue to improve your credit in 2024.

Don’t expect a credit limit increase in 2024

One consequence of rising rates of delinquent credit card payments is that the banking system may tighten credit standards. Even if you have no financial problems and pay your credit card bills in full and on time, stricter standards may make it more difficult to increase your credit limit.

Depending on the card company, your credit limit may be lowered. For example, if your credit limit is $10,000, you may receive a letter from your bank lowering your limit to $8,000. A Federal Reserve survey found that “the proportion of accounts receiving credit limit reductions is increasing.” Lowering your credit limit can hurt your credit because it affects your credit utilization ratio.

To prevent your credit limit from being lowered, pay your bills on time, don’t exceed your credit card limit, and continue to use all your open credit cards. Inactive credit card accounts can sometimes be closed by your credit card. Card issuer. Becoming a trustworthy customer of your credit card company increases your chances of maintaining your credit limit.

Short on cash? Continue making minimal credit card payments

Even if money is tight, you should always try to keep the minimum payment on your credit card. It’s better to make the minimum payment, even if it’s $50 or $25 per month, than to let your credit card balance go past due. Accepting higher interest costs in the short term by making minimum payments is often better for your personal finances than taking a hit to your credit score due to late payments.

Don’t panic. Stick to the credit card that’s right for you.

A new credit card delinquency survey shows that some Americans are struggling with personal finances. But that doesn’t mean you have to worry about your credit card being canceled or losing your credit card privileges. The good news is that most people (nearly 97% of credit card balances) still pay their credit card bills on time.

For many Americans, credit cards are a useful tool in their personal finances and everyday life. Credit cards allow you to conveniently make purchases, shop online, handle emergency expenses, and earn valuable credit card rewards. Even if credit standards get a little stricter in 2024, most Americans with a decent credit score will still be able to use credit cards the way they want.

However, if you want to maximize the benefits of your credit card, pay your credit card balance on time and in full (if possible). This will help you avoid interest charges, maintain your credit score, and get the most financial benefit from a rewards credit card.

gist: The percentage of Americans who are behind on their credit card bills has increased in recent months. But most Americans still pay their credit card bills on time. Even if credit limits are slightly reduced in 2024, people with good credit are likely to continue to enjoy credit card benefits such as travel reward points and airline credit card frequent flyer mileage.

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