Credit Card Delinquencies Up in All US Cities Reviewed: WalletHub

WalletHub editor Christie Matherne says a central bank rate cut could help consumers, but it wouldn’t solve the problem. Instead, Ms. Matherne lays out some ways credit card holders carrying debt could get in a better position to pay off their debt and how to prevent themselves from getting there in the first place.

According to a new report by personal finance company WalletHub, major American cities saw their rate of credit card delinquency rise by as much as 85 percent in the first quarter of 2024 compared to the same time period last year.

The report ranked the top 100 U.S. cities in terms of their increases in credit card delinquencies, with the percentages ranging from 84.81 percent in Chula Vista, California, to 19.01 percent in Des Moines, Iowa.

“Every city we looked at had an increase in credit card delinquencies,” Christie Matherne of WalletHub told NTD.

Other U.S. cities on the list include San Francisco, with a 78.94-percent increase in delinquencies, Honolulu with 67.5 percent, Portland, Oregon with 66.53 percent, Miami with 60.5 percent, and Philadelphia with 56.14 percent.

The two largest cities in the United States are also included on the list: New York City came in 77th with a 48.71-percent increase in credit card delinquencies, while Los Angeles ranked 73rd with a 49.43-percent delinquency increase.

The findings of the WalletHub study demonstrate the larger trend of increased credit card usage that has occurred since the rate of inflation increased significantly in 2021.

The Federal Reserve Bank of New York reported in May that total household debt increased by $184 billion, or 1.1 percent, in the first quarter of 2024. Total household debt now stands at $17.69 trillion, including credit cards and all types of loans.

Credit card balances declined by $14 billion in the first quarter, which the Fed reported is typical for that time of year. But balances are still 13.1 percent higher than they were a year ago.

Serious credit card delinquencies of at least 90 days went up an average of 51 percent over the past year, from 4.57 percent of all delinquencies in Q1 of 2023 to 6.86 percent in the same period of 2024, according to the Federal Reserve.

This percentage increase was much larger than for other types of debt like mortgages, home equity lines of credit, and auto loans. According to the study, fewer student loans went into serious delinquency—the only category to see a decrease.

The overall balance of U.S. credit card debt climbed almost 12 percent year-on-year, to just under $1.12 trillion, according to Liberty Street Economics.

Tips to Get Back on Track

WalletHub’s report gave suggestions for how delinquent borrowers could get back on track with their payments.

The first step is making a budget to determine how income can be spent, followed by tracking of spending to see where frivolous items can be cut.

Another way to remain current is to schedule automatic payments for at least the minimum amount due on each card. For borrowers who can’t pay the minimum payment, it may be possible to negotiate with the card issuer to get a modified payment plan for a period of time. This will help avoid delinquency because both parties have agreed to the terms.

“If you miss a credit card payment, don’t panic!” Wallethub editor John Kiernan said in an email statement. “Your issuer won’t report you as delinquent to the credit bureaus until you’re 30 days late. You’ll still have to deal with any late fee or penalty rate consequences your issuer decides to implement, but if you can manage to get current before 30 days are up, you can avoid a big credit score hit.

“In addition, if you’re unable to make payment due to financial difficulty, you can always ask if your issuer has a hardship plan that may allow you to skip payments, avoid fees, or get a lower interest rate temporarily.”

“Start by creating a realistic budget,” said Ms. Matherne. “If your problem is overspending … it is definitely time to start looking at where your money is going.”

“Set up automatic payments—that’s a big one. All of my cards, personally, are on automatic payments, and it’s just the minimum amount, just in case I forget to pay it,” she said.

Card-holder Doris K. of Bethlehem, Pennsylvania, was able to get some of the late fees credited to her account by calling her credit card issuer after she fell several months behind on payments due to health challenges.

Although her credit card was frozen and could not be used for several months while she made on-time payments, she told NTD News she feels better now that she has caught up on payments, and that she plans to pay off the balance in the near future now that her health has improved.

While late credit card payments will incur fees that usually range between $25 and $40, delinquencies normally don’t start until the account is 30 days past due.

Delinquencies that are not paid could end up being charged off, which typically means closure of the account. Some credit card companies will then move to garnish the borrower’s wages or bank account to get what is owed, and negative information can remain on the borrower’s credit report for up to seven years.