More people are falling behind on their credit card payments, flashing a warning sign as high interest rates, high inflation over the last few years, and a slowing job market pressure on household finances.

In the first quarter of 2024, 8.9% of credit card holders who were formerly current on their payments fell into delinquency, up from 8.5% in the previous quarter and a fresh high since 2011, the Federal Reserve Bank of New York said Tuesday. 

People falling into delinquency tended to have maxed out their cards, suggesting “tight cash flow situations” rather than forgetfulness as a reason for failing to pay bills on time, economists at the New York Fed said in a blog post accompanying the report. 

The New York Fed did not analyze why more people have been falling behind on credit card bills, but separate reꦍports highlighted wh🔴y credit card debt has become harder to manage.

High interest rates have made credit card debt more burdensome. As of February, the average credit card interest rate was 21.6%, the highest since at least 1995 according to data from the Federal Reerve. The Fed’s campaign of interest rate hikes since 2022, meant to combat inflation, has pushed up interest rates for credit card༺s and other kinds of loans. 

At the same ti𓃲me, inflation has raised the cost of living dramatically. Even though price increases have decelerated since peaking in mid-2022, people are still paying 25% more for food and 23% more for rent than before the pandemic. While pay raises have more or less kept pace with inflation on average, people whose incomes didn’t increase still face those higher costs. 

Inflation Pushes Some Into Delinquency, Making Loans Harde🧸🐟r to Come By

An online survey of 2,000 borrowers by online personal finance company Achieve pointed to inflation as the leading reason people fell behind on their bills. Among people who fell behind on any kind of bill, 21% cited higher living expenses due to inflation.

“Skipping payments on financial obligations in order to afford essentials is the type of decision driving more everyday people deeper into debt,” Achieve CEO Andrew Housser said in a press release, adding that for "many consumers, money is going out the door as quickly as it’s coming in, if not faster.” 

Concerns about consumers’ ability to repay credit cards were also reflected in a recent survey of bank loan officers, which showed banks continued a trend of raising credit score requirements and other standards for credit card borrowing in the first quarter.

Consumers 🍰are struggling to pay back credit cards more than other types of loans, according to the New York Fed’s data.

Auto loan delinquency transitions are also elevated, hitting 7.9% in the first quarter, the highest since 2010. However, delinquency rates for mortgages have remained below pre-pandemic levels, while those for student loans are near record lows as borrowers with federal loans have been protected by Biden-era rule changes to student aid programs.