Credit Card Delinquency Rates Are at a 10-Year High. Here's What It Means for You

New Federal Reserve data shows that more Americans are having trouble paying their credit card bills. During the pandemic, many Americans were able to save money and pay off credit card debt. But in the past few years of rising prices, "revenge spending," and depleted savings accounts, some Americans are starting to struggle with credit card delinquency. The percentage of credit card balances that is 30 or more days past due is at its highest level in 10 years.

According to a recent survey from the Federal Reserve Bank of Philadelphia, credit card delinquency rates have increased to above pre-pandemic levels. When people fail to repay their credit cards and let the payments become overdue, that's a sign of financial stress.

As of the third quarter of 2023 (the most recent data available), here's approximately how many credit card balances were overdue:

• 30 or more days past due: 3.2%
• 60 or more days past due: 2.2%
• 90 or more days past due: 1.5%

If your credit card balance is overdue, this can cause a big hit to your credit score. Letting a credit card go into 60- or 90-day delinquency can be a sign of serious trouble in your personal finances. But even if you're not falling behind on your credit card bills, the fact that so many other American credit card borrowers are struggling could have implications for your credit.

Let's see what rising credit card delinquencies could mean for your ability to borrow -- and how you can keep improving your credit in 2024.

Don't count on a credit limit increase in 2024

One consequence of higher rates of overdue credit card payments is that the banking system might tighten credit standards. Even if you're not having financial problems and you're paying your credit card on time and in full, tighter standards might make it harder for you to get a credit limit increase.

Depending on your credit card company, your credit limit might even be lowered. For example, if you have a credit limit of $10,000, you might get a letter from your bank saying that your limit is being lowered to $8,000. The Fed survey found that "the percentage of accounts receiving a credit line decrease has been climbing." Getting your credit limit lowered can hurt your credit, because it affects your credit utilization ratio.

To keep your credit limit from being lowered, make sure you pay your bills on time, avoid maxing out your credit cards, and try to keep using every credit card that you have open -- inactive credit card accounts will sometimes be closed by the credit card issuer. Keep being a reliable customer for your credit card company, and you'll be more likely to keep your credit limit.

In a cash crunch? Keep making minimum credit card payments

Even if money is tight, you should always try to keep making minimum payments on your credit cards. It's better to make a minimum payment, even if it's only $50 or $25 per month, than to let that credit card balance end up overdue. Accepting more interest charges in the short term by making minimum payments is often better for your personal finances than taking a hit to your credit score from overdue payments.

Don't panic -- keep using credit cards that work for you

The new credit card delinquency survey shows that some Americans are struggling with their personal finances. But that doesn't mean your credit card is going to get canceled, or you need to worry about losing access to credit. The good news is: most people (almost 97% of credit card balances) are still paying their credit card bills on time.

Credit cards, for many Americans, are a useful tool for personal finances and everyday life. With credit cards, you can make purchases conveniently, do online shopping, cover emergency expenses, and earn valuable credit card rewards. Even if credit standards get a little more strict in 2024, most Americans with decent credit scores will likely be able to keep using credit cards in the ways they want.

But if you want to maximize the benefits of credit cards, make sure you pay your credit card bills on time and in full (if you can). This will help you avoid interest charges, preserve your credit score, and get the most financial benefit from your rewards credit cards.

Bottom line: The percentage of Americans who are falling behind on their credit card bills has increased in recent months. But most Americans are still paying their credit cards on time. Even if credit limits decrease slightly in 2024, people with good credit are likely to continue to enjoy the benefits of credit cards, such as travel reward points, airline credit card frequent flyer miles, and more.