Morning Business Report: Credit card delinquencies hit highest level in 15 years
Americans are falling behind on their credit card payments at the highest rate seen since the financial crisis.
(LILAMAX)- Americans are falling behind on their credit card payments at the highest rate seen since the financial crisis.
The percentage of credit card balances that were at least 90 days delinquent climbed to 13.12% during the first quarter of the year, marking a 15-year high. Experts point to a combination of stubborn inflation and elevated interest rates as major factors driving the increase.
Data from the Federal Reserve Bank of New York shows Americans carried a record $1.25 trillion in credit card debt during the first quarter, up from $1.18 trillion during the same period a year earlier. It is the highest first-quarter credit card balance recorded since tracking began in 1999.
At the same time, average credit card interest rates have surged. Federal Reserve data shows rates rose to 21% in February, compared to 14.6% in February 2022.
Organizations that help consumers manage debt are also seeing increased demand. The National Foundation for Credit Counseling reported a 24% increase in clients in January compared to the previous year, while average monthly client numbers are up 60% compared to 2018 levels.
Credit reporting agencies estimate the average American carries between $6,500 and $6,700 in credit card debt.
Financial experts recommend several steps for consumers looking to regain control of their debt, including limiting credit card use, reviewing monthly spending habits, prioritizing repayment of high-interest balances and seeking lower interest rates from lenders. Consumers may also benefit from balance transfer offers or assistance from nonprofit credit counseling services.
Experts also encourage people facing financial stress to focus on free or low-cost activities, such as walking, listening to podcasts and volunteering, as alternatives to spending money on entertainment.
