Credit card delinquencies are rising. Here's what to do if you're at risk

People aged 35 and under are particularly struggling with credit card payments compared to other age groups due to several factors. The increasing cost of living, stagnant wage growth, and the end of pandemic-era aid such as stimulus payments and increased unemployment benefits have made it difficult for younger Americans to keep up with their credit card payments. Additionally, high inflation and rising interest rates have further exacerbated the financial strain on this age group.

According to a recent study by Quicken Inc., 53% of millennials and 41% of Gen Z respondents said they were more reliant on credit cards than ever before1. The survey found that 38% were using credit cards to make ends meet, and 35% of Americans said they believed they would max out at least one of their credit cards by the end of the year, regardless of their income level.

Moreover, the past-due rate for those aged 40 and over was below 5%, indicating that younger Americans are facing greater challenges in managing their credit card debt. The end of the pandemic-era student loan forbearance this fall could further impact the financial stability of younger adults, making it harder for them to dig themselves out of credit card debt.

Experts recommend several specific steps for individuals at risk of credit card delinquency:

1. Seek help from a nonprofit credit counselor: Reaching out to a nonprofit credit counseling organization can provide guidance and support in managing debt. They can help create debt management plans with lower interest rates, no late fees, and a single monthly payment. Be cautious of scammers and for-profit debt consolidation companies that may charge higher fees.

2. Negotiate with credit card companies directly: Contact credit card companies to negotiate interest rates, fees, and long-term payment plans. It's in the company's best interest for you to pay before the debt goes into collections.

3. Inquire about hardship programs: Many credit card companies and lenders have hardship programs available for those facing financial difficulties. These programs may offer options to skip or defer payments without penalties.

4. Know your credit score: Stay informed about your credit score and keep up with payments to avoid additional interest on revolving balances and debt. Be cautious with "buy now, pay later" loans that can contribute to financial stress.

5. Budget and prioritize payments: Create a budget to understand your income, expenses, and outstanding debts. This will help you determine how much you can allocate toward paying your credit card debt.

Remember, it's crucial to take action as soon as possible to mitigate the impact of delinquency on your credit score and overall financial situation.