Credit Card "Delinquencies" Are At A 12 Year High
Falling behind on your payments? We have key tips to help.
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📝 Main topic: Credit card delinquencies are at a high.
The rate of credit card delinquencies has recently surged to 10.93%, a level only surpassed during the 2008-2010 Great Recession.
According to data from the Federal Reserve Bank of New York, in the first quarter of 2024, the percentage of credit card balances overdue by 90 days or more hit its highest point since 2012. Over the past year, around 9.1% of credit card balances became delinquent.
In the second quarter of 2024, about 136,000 people had bankruptcy added to their credit reports, an increase from the previous quarter and following pre-pandemic seasonal trends.
What’s contributing to these delinquencies?
These delinquents may result from many factors. Some say it’s from revenge spending—consumers spending more because of unprecedented adverse economic events. Others believe that people overextended themselves during the pandemic and are now dealing with the consequences of inflation and higher rent prices.
Rising delinquency rates can also strain the economy. If people continue to miss payments, credit card companies may tighten access to credit, which can slow consumer spending.
As you can see, credit card delinquency is a slippery slope that can lead to higher credit card fees and potential bankruptcy. Fortunately, there are ways to catch up if you’ve fallen behind in your payments.
Keep reading!
7 Steps to take you’re behind on your credit card bills
There are many reasons why people fall behind in their bills—unexpected life circumstances, growing responsibilities, job loss, etc. No matter your circumstances, we’re here to help.
Here are seven actionable steps you can take today to get yourself back on track.
Step 1: Organize when your different bills are due
The first step in catching up on bills is fully understanding where you are financially. Start by listing every credit card bill on an Excel spreadsheet, pen and paper, or whatever method you prefer. Organize them like this to ensure timely payments:
Company
Due Date
Past Due Amount
Minimum Payment Due
Total Balance Due
Note any automatic payments, so you know when the money will be taken out. Sometimes, automatic payments are deducted a few days before the due date.
Once you know when everything is due, you can manage your money to pay what you owe.
In my financial journey, organizing everything and making payments has helped me take control of my expenses. Using certain tools such as a budget calendar has helped me plan and stay on top of my bill pay.
I’ll admit that I was nervous about reviewing my credit card statements. However, knowing the actual amount that was due helped me budget my income and made making payments more attainable.
Instead of this scary unknown number, I knew exactly what was due and how to take action.
Step 2: Reevaluate your needs and wants
Now that you know which bills are due, how much is due, and when they are due, you may feel one of two ways. You may feel confident because your income will cover your payments. If not, you may start biting your nails, wondering if you can afford all these payments.
If you notice you need some extra money to make payments, consider reducing your discretionary spending. Consider listing all your non-essential expenses and determining which can be reduced or eliminated.
Review your spending in areas like:
Subscriptions
Cable
Alcohol
Eating out
Makeup
Consider eliminating items that don’t add value to your life or that you don’t use. For instance, you can cancel your cable bill if you use streaming platforms more.
You can also review your necessary expenses, such as groceries, electricity, and fuel, and look for alternative solutions. For instance, consider buying store brands instead of name brands to save money on groceries.
Is leaving the hallway lights on or the TV on when you’re in the other room raising your electricity bill?
Have you considered carpooling or biking to work instead of driving?
Remember, all of these changes don’t have to be permanent. Once you get back on track with your bills, you can look into adding back some of the things you cut out.
Step 3: Review your credit card statement
Reviewing your credit card statements can help you find errors. You might have been overcharged, double charged, or even have a suspicious charge. If you find any mistakes, it could impact how much you pay each month and lower your monthly payments.
If you notice anything is off, contact your bank or credit card company. Most of the time, they can solve the problem with one phone call.
Step 4: Contact service providers to negotiate a new rate
It typically doesn’t hurt to ask for a lower rate or a better service deal, like your cell phone plan. I have negotiated lower rates for internet services and credit card payments.
Lowering your monthly payments can make it easier to make payments on time.
Speaking directly with a customer service representative is best when negotiating or requesting a better rate.
Step 5: Reach out to your creditors to set up a new payment plan
Some credit card companies are willing to negotiate with you, depending on your circumstances but you have to communicate with them. Here are some agreements you discuss with your credit card company.
Hardship program
A hardship agreement, sometimes known as a forbearance program, could be an option if you’re facing a temporary financial setback, such as suddenly losing your job or experiencing an unexpected illness or injury. If this is an option for you, contact your credit card issuer immediately to see if they offer a hardship plan.
Under a hardship program, your card issuer might temporarily lower your interest rate, waive late fees, or reduce your minimum payment.
Remember that this type of agreement could still affect your credit. Depending on the terms, the bank may report negative information to the credit bureaus during this period, which could impact your credit history and score.
Make sure you are clear on all the details before moving forward.
Lump sum settlement
With this negotiation tactic, you offer to settle your debt in one big payment, but for less than what you owe. For example, if you have $3,000 in charges on your credit card, you might ask the bank to take $2,000 as a full payment. If they agree, the rest of the debt is forgiven.
If you settle for a lump sum, there are two important aspects to consider. First, your credit report might show a remark saying the account was “settled for less than the full balance.”
Second, the forgiven debt could be considered income, meaning you may have to pay taxes on it, so it’s wise to start saving for that.
A workout agreement
This agreement usually means your credit card issuer might lower your interest rate or waive it for a while. They may also reduce your minimum payment or waive late fees to help you easily manage your debt.
However, your card issuer could close your account as part of the deal. If the account is closed, it could affect your credit utilization (the percentage of credit you use). For example, if you have two credit cards with a combined $10,000 limit and use $3,000, your utilization is 30%. If you close one card with a $5,000 limit, your available credit drops to $5,000, increasing your utilization to 60%.
To check your utilization rate you can use a credit card utilization calculator.
Payment plan
Among these options, you can also ask to be put on a payment plan where you can negotiate a different monthly rate. This can help prevent your account from going into collections, protecting your credit score.
We know that calling a creditor can seem scary, like walking into the principal’s office when you were a kid. However, most creditors are often willing to make adjustments in order to receive payments. Offering to pay what you can, is still better than nothing.
Step 6: Boost Your Income
While lowering your expenses and negotiating new rates is helpful, one of the best ways to get back on track with your finances is to make more money. Here are some ways to do so.
Ask for a raise
Consider your recent job performance. Have you gone above and beyond? Have you acquired new skills or certifications? Also, what is the current average salary for someone in your position? These are things to consider before asking for a raise.
Receiving a raise is one of the fastest ways to grow your income. However, you want to increase your chances by demonstrating your need or qualifications for a raise.
Things to consider when asking for a raise include:
The last time you received a raise
Rate of inflation
Current accomplishments
Switch jobs
Sometimes, you can get paid more working for someone else. Start to search for other companies that are hiring someone in your position. Compare salaries and if it seems like a good fit, don’t hesitate to apply.
Start a side hustle
A side hustle is a great way to generate more money for your bills. There are many lucrative side hustles you can start with. Here is a list of a few
Teach English online
Pet sit or dog walk
Start social media management or virtual assistance for businesses
Work with voice-over services
Remember to set aside money for taxes for any extra money you earn.
Step 7: Create a budget and a financial plan
Setting up a budget is essential to better managing your money. With a budget, you can understand your income and expenses and stay on track with your credit card payment.
There are many different budget types and tools to choose from. Some of the most common budgets include:
A solid financial plan includes a budget, financial goals, and plans for the future. In addition to managing your money daily, how do you want your money relationship to be 3 -5 years from now?
Feeling overwhelmed and frustrated by overdue bills is a heavy burden to bear. However, you can regain control of your finances by staying proactive and managing your past-due bills.
Take charge of your finances with our free budgeting course on creating a budget that fits your needs!
🥰 Team CGF’s Amazon Favs
Debt is an invisible weight that can hold you back from living your desired life. While the previous tips can help you get back on track, why not focus on eliminating debt for good?
Imagine a life where instead of monthly credit card payments, you put that money towards savings, traveling, or buying rollerskaters for your new hobby.
Here are some books we think we’ll help you eliminate debt and set you up for a brighter future.
P.S. If you make a purchase we may earn a commission, this helps us grow!
Overcoming Debt, Achieving Financial Freedom: 8 Pillars to Build Wealth
In Overcoming Debt, Achieving Financial Freedom: 8 Pillars to Build Wealth, lawyer and entrepreneur Cindy Zuniga-Sanchez offers a straightforward guide to achieving financial independence. Aimed at young adults, students, and early-career professionals, this book provides practical tips for managing money, paying off debt, and building wealth.
Inside, you’ll find:
Strategies for creating a debt repayment plan that saves you both time and money
Tips on negotiating your salary and earning more with profitable side hustles
Simple investment techniques that balance risk and reward
The exact money strategies Cindy used to go from six-figure debt to a six-figure net worth
This book is your go-to resource for reducing financial stress and building a secure future.
Zero Debt: The Ultimate Guide to Financial Freedom 3rd Edition
Whether you’ve recently fallen into debt due to unexpected circumstances or have been struggling for years, know this: debt doesn’t have to control your life. No matter your situation, this book gives you a simple, step-by-step 30-day action plan to take control of your finances. It’s easy to follow, and it works.
Zero Debt reveals the author's exact strategies to wipe out $100,000 in credit card debt in just three years—without missing a single payment. If she can do it, so can you!
In this updated version of Zero Debt, you’ll learn:
The most effective ways to pay off credit cards (and it’s not what most experts recommend)
How to tackle student loans and reduce auto loan payments
Simple budgeting and spending tips anyone can follow, even if you love to shop
Insider tips on negotiating with credit card companies and repairing your credit
Your rights when dealing with bill collectors and what they legally can’t do
Trusted debt management services and credit counseling options
Strategies to strengthen your finances so you stay out of debt for good
You can experience peace of mind by eliminating debt and using proven strategies to keep your money in your pocket.
The Debt Slayers: A Quick Guide for Slaying Debt and Living A More Fulfilling Life
Got a lot of debt? You're not alone. Whether it's part of the $1.6 trillion student loan crisis, or the $1 trillion in credit card balances, debt can weigh you down—leading to less savings, more anxiety, and distractions from your goals. LeAnn and Tim, a millennial couple, share their journey of becoming debt-free after paying off $429K and taking back control of their financial future.
The Debt Slayers book doesn’t just explain why being debt-free is so empowering—it gives you practical, real-world tips that worked for the authors so you can achieve the same freedom.
Clever Girl Finance My Wealth Plan Workbook: Your Personalized Plan to Ditch Debt, Save Money and Build Real Wealth
In The Clever Girl Finance Workbook: My Wealth Plan, personal finance expert, (and our very own!), Bola Sokunbi offers a hands-on toolkit to help you map out your long-term financial goals and take action right away.
This workbook is filled with custom Q&A sections, financial worksheets, and checklists where you can input your answers and outline your next steps.
Everything is laid out in an easy-to-follow format, so you can focus on fine-tuning your financial plans without feeling overwhelmed. Here's what you’ll learn to do:
Organize your finances, track spending, calculate net worth, define your money values, and set financial goals
Create a budget to help you pay off debt or grow your savings
Improve your credit, get the right insurance, and explore smart investment opportunities
Develop a strategy to boost your income, whether in your career or through a side hustle
And much more!
Whether you're just starting or looking to improve your financial knowledge, The Clever Girl Finance Workbook is perfect for women ready to take immediate action on their finances. Pair it with the Clever Girl Finance book series, or use it as a standalone guide to building wealth!