Millions Of Households Are Behind On Their Credit Card Bills. Here's How To Get Back On Track
A Note From Patricia:
Hello and welcome to Forbes Advisor’s Weekly Brief, where each week we dive into the realities of consumer finance and empower you with knowledge to help make your financial journey easier.
After historic lows during the pandemic, credit card delinquency is rising.
The Federal Reserve Bank of New York’s quarterly report on household debt and credit found that nearly a fifth of Americans “maxed out” their credit cards—meaning they’d used 90% or more of their available credit. Carrying this level of debt can tank your credit scores and result in high interest charges.
Joelle Scally, an economist at the New York Fed, said in a press release that the missed credit card payments reveal “worsening financial distress among some households.”
In this week’s weekly brief, we’ll discuss why credit card delinquency is on the rise and how you can get back on track with repaying your debt.
Sincerely,
Patricia Louis
Editor, Forbes Advisor
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Millions Of Households Are Behind On Their Credit Card Bills. Here's How To Get Back On Track
Inflation has pushed some Americans to become more reliant on their credit cards, since their take-home pay doesn’t go as far.
But as inflation continues to grip the economy, the Fed’s rate increases have taken a toll on interest rates across the board, including credit cards. According to Ned Davis Research, a global provider of independent investment research, solutions and tools, “higher interest rates have definitively made their mark on consumer loans and credit card debt. Indeed, delinquency rates have jumped in line with higher interest rates.”
The share of credit card debt that's over 90 days past due rose to 10.7% during the first quarter, 13.1% above last year’s levels. Delinquencies are now at a 14-year high.
If you pay the minimum on your credit card balances, these balances may snowball over time and become harder to manage. If you’re affected by debt, you can do a few things to start eliminating your debt:
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