Credit card delinquencies surpass pre-pandemic levels | CNN Business (2024)

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Credit card delinquencies surpass pre-pandemic levels | CNN Business? ›

Credit card delinquencies have surpassed pre-pandemic levels and continue to rise. Severe credit card delinquencies, those 90 days overdue, have now climbed to 10.7% — the highest since 2012. The findings show how pockets of financial stress continue to emerge in the US economy following three years of high inflation.

The share of credit card debt that's severely delinquent, defined as being more than 90 days overdue, rose to 10.7% during the first quarter of 2024, according to the Federal Reserve Bank of New York. A year ago, just 8.2% of credit card debt was severely delinquent.

According to the Federal Reserve Bank of New York report, 9% of credit card balances entered delinquency in the first quarter of this year. That means nearly a tenth of Americans struggled with their credit card payments in the last few months.

Nearly 1 out of 5 credit card users has maxed out on their borrowing. STEVE INSKEEP, HOST: That's according to the Federal Reserve Bank of New York, which says more people are falling behind on their monthly bills for credit cards.

According to the most recent delinquency data from the Fed, the 30-day delinquency rate (or the percentage of total outstanding credit card balances currently at least 30 days overdue) rose from 3.08% in the fourth quarter of 2023 to 3.16% in the first quarter of 2024.

Some of the most common expenses that throw people into credit card debt are unexpected medical bills, emergency expenses and even just everyday spending, such as on groceries, that adds up.

Delinquencies can have a highly negative effect on your credit. Payment history is the most critical factor influencing your credit, so when a lender or credit card issuer reports that you're late on a bill, you can expect your score to plummet. The longer the delinquency, the more your scores are likely to suffer.

One potential relief option is credit card forbearance, which can pause or reduce your monthly payments for a period of up to 12 months. Depending on your situation and card issuer, you could even qualify for a lower interest rate and waived late fees.

There could be a variety of reasons for this. According to Visa and Mastercard, an average of 15% of recurring payments are declined, but for some industries, the rate can be double that.

If you don't pay the minimum payment your account will go into arrears. If this happens: Your lender will contact you to demand the missing payments are made. Then if you don't make the payments they ask for, the account will default.

What credit card has a $100000 limit? ›

On our list, the Ramp Corporate Card and the Chase Ink Business Premier Preferred Credit Card offer the best opportunity to access a $100,000 credit limit. Ramp determines your spending limit based on factors like your cash-on-hands and monthly expenses, while Chase uses creditworthiness to calculate your credit limit.

The highest credit card limit you can get is over $100,000 according to reports from credit card holders. But like most credit cards in general, even the highest-limit credit cards will only list minimum spending limits in their terms. The best high limit credit cards offer spending limits of $10,000 or more.

The minimum payment mindset

Here's how most people get trapped in credit card debt: You use your card for a purchase you can't afford or want to defer payment, and then you make only the minimum payment that month. Soon, you are in the habit of using your card to purchase things beyond your budget.

What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.

Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?

Wage gains haven't all kept up with inflation, which hits lower-income consumers harder, and rent increases have eaten into savings some consumers may have built up during the early years of the pandemic.Silvio Tavares, CEO of VantageScore, a credit score modeling and analytics company, said that delinquencies have now ...

Generally speaking, negative information such as late or missed payments, accounts that have been sent to collection agencies, accounts not being paid as agreed, or bankruptcies stays on credit reports for approximately seven years.

Over the last year, roughly 8.9% of credit card balances transitioned into delinquency, the New York Fed reported.

Being late by more than one month is considered delinquent, but the information is typically not reported to credit reporting agencies until two or more payments are missed. Delinquent accounts on a credit report can lower credit scores and reduce an individual's ability to borrow in the future.

Inflation impacting credit card debt

The closely monitored prime rate, used to set interest rates for credit cards, typically moves in tandem with the federal funds rate. In other words, if the prime rate climbs, the interest rates for credit cards are likely to climb as well.