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This year, more people fell behind on their credit card bills. Here’s how tough things could get in 2024.

After more Americans fell behind on their credit card payments this year, delinquency trends are likely to get worse before they get any better in 2024.

This year, credit card balances topped $1 trillion for the first time. Rising prices and rising interest rates have made maintaining balances more and more expensive.

Meanwhile, in the third quarter, the proportion of credit card debt rose to 8% for the first time. This is an increase from 6.5% in the first quarter of 2023.

According to household debt statistics from the Federal Reserve Bank of New York, the 30-day credit card delinquency rate has been this high for over 10 years.

Credit card delinquency rates will continue to rise in the new year, according to new Goldman Sachs estimates, as markets wonder about the continued strength of consumers and how they are feeling.

The new credit card delinquency rate is expected to increase to 9.5% by the first half of 2024 before easing to about 9% by the end of the year, researchers said in a report Thursday. Low-income cardholders will feel the greatest burden, they added.

According to New York Federal Reserve statistics, the first quarter of 2011 was the last time the initial credit card delinquency rate exceeded 9%.

Goldman Sachs researchers said higher credit card interest rates and the resumption of federal student loans may be contributing to the continued upward trend. Decreasing interest rates and rising incomes will help slightly reduce delinquency rates in the second half of the year, they wrote.

The reopened student loan bill hit the income of lower-income households by an average of 7%, “which may have caused some borrowers to miss their credit card payments.”

Nonetheless, the authors focus on a silver lining.

“Reassuringly, the recent rise in delinquency rates does not appear to be due to labor market difficulties or unsustainable spending,” they said. “Credit card data suggests people have cut back on spending.” “It will peak in 2021 and become more aligned with income levels.”

YouGov’s 2024 Resolutions poll found that almost half (44%) of people said they wanted to save money, reduce spending and pay off debt in the new year. Personal finance resolutions were my third goal, after eating healthier. And weight loss.

But the drumbeat of flight is being captured elsewhere.

Data shows more people are missing their mortgage payments. Delinquency rates on delinquent Federal Housing Administration loans hit a nine-year high in November.

Overall mortgage delinquency rates are still below pre-pandemic levels, but one observer said it’s a trend “worth watching.”

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