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Consumers Are Falling Behind on Credit Card Payments: How to Stay Ahead

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Elinor Rozenvasser Updated: September 13, 2023 • 3 min read

Key Points:

  • In the second quarter of 2023, total U.S. credit card debt hit $1 trillion. 

  • The number of delinquent payments on credit card debt is beginning to rise. 

  • Staying on top of your credit card payments might involve paying off your high interest rate cards, reworking your budget, or consolidating the debt into a fixed-rate loan.

American households are taking on more credit card debt. For the first time ever, total U.S. credit card debt hit $1 trillion. The shocking number is a significant milestone. But as credit card debt rises, more consumers are falling behind on their credit card payments. 

Let’s explore this trend and how you can avoid falling behind on your payments. 

A Growing Number of Americans Are Falling Behind on Payments

The total amount of debt that Americans are carrying is on the rise. In terms of credit card debt, the total amount owed has hit the eye-water figure of $1 trillion. But other kinds of debt, like mortgage balances and auto loans, have also grown in the last quarter. 

A growing amount of debt seems to be a recipe for growing delinquency rates. According to the Federal Reserve Bank of New York,  5.08% of credit card accounts are behind on payments by more than 90 days. That’s a sharp jump from 3.35% in the second quarter of 2022. 

5.08% of credit card accounts are behind on payments by more than 90 days.

Why Are Americans Falling Behind?

As more Americans fall behind on their credit card payments, it’s natural to wonder why this change is happening. Below are some possible reasons for the rising delinquency rates:

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  • Higher interest rates: With the Federal Reserve increasing interest rates, many credit card users have seen the interest rate attached to their cards rise. In May 2023, the average interest rate on credit cards was 20.68%, which is up from 14.60% in 2021. 
  • Bigger payments: Higher interest rates can push credit card balances higher, and lead to higher minimum payment requirements. Many households may have a difficult time fitting the higher payment into their budget. 
  • Inflation: The cost of essentials rose sharply with inflation starting in 2021. While the Fed’s rising interest rates have helped tame inflation, the cost of basics is still significantly higher than they were at the start of 2020. It can be a challenge to adjust budgets to meet these higher costs. 

How to Avoid Falling Behind on Your Credit Card Payments

The thought of falling behind on your credit card payments is undeniably uncomfortable. If you are determined to avoid the hit of delinquent payments, here are some strategies to help you stay on top of your credit card payments.

  • Evaluate your budget: If your credit card balance is growing too fast for your liking, take a close look at your budget. Look for any way you can temporarily cut back on purchases to throw extra money at your credit card balance. Remember, temporary cuts can make a big difference. 
  • Make more than the minimum payment: Making the minimum payment will leave you in debt for a long time. Do everything in your power to make more than the minimum payment. 
  • Look for extra income: Increasing your income can make paying off your debt easier. A few ways to boost your income include looking for a side hustle, asking for a raise, or picking up extra hours at work. 
  • Consider a balance transfer: Some credit cards offer a 0% introductory rate. If you transfer your existing balance to a new credit card, this introductory period gives you some time to make progress on your repayment plan without a high interest rate holding you back. Before you open a balance transfer offer, read the fine print to learn about any fees. 
  • Consider debt consolidation: If you have credit cards with a high interest rate attached, consider a debt consolidation loan. In many cases, you can pay off multiple balances with a single loan that has a lower interest rate attached. A fixed-rate personal loan for credit card debt comes with a stable monthly payment that can make it easy to budget. 

The Bottom Line

Credit cards often come with notoriously high interest rates attached. When combined with rising costs for basic needs, anyone who leans on a credit card might be in danger of getting stuck with unaffordable monthly payments. 

The good news is it’s possible to stay on top of your credit card payments and dig out of credit card debt for good. As you pay down your credit cards, stay positive. Don’t be afraid to make big changes to eliminate this debt. 

If you decide to pursue a debt consolidation loan, take a minute to shop around for the best rates

Elinor Rozenvasser is a content writer and editor with a knack for finance. She holds a Bachelor's in Communications and Business from Reichman University, and has been swimming alongside finance specialists for over a decade. She's not your typical financial writer, though. She's more likely to use witty puns and sarcasm than jargon and technical terms. But don't let that fool you. She's still a whiz when it comes to explaining complex financial concepts in a way that anyone can understand. If there's any writer who can make finance fun and engaging, Elinor is your girl. She's sure to leave you laughing (and learning) long after you've finished reading her work.