Credit card delinquencies that are 90 days or more past due are at the highest level in 15 years, according to recent Federal Reserve Bank of New York data. Credit counselors say rising costs—especially gas prices—are pushing households into cycles where minim
Serious credit card delinquencies—balances 90 days or more past due—are at the highest level they’ve been in 15 years, according to recent data from the Federal Reserve Bank of New York.
For certified credit counselors who help Americans dig out of debt. the figure feels less like a surprise and more like a familiar rhythm: a brief stretch of relief. followed by another hit. “Every time it seems like things are getting just a little bit better. there’s another one-two punch waiting for consumers around the corner. ” says Lara Ceccarelli. a certified credit counselor based in Bremerton. Washington.
The latest blow. she says. has been the spike in gas prices. even as other necessities—including housing and groceries—stay expensive. For people using credit cards just to get through the month. costly interest rates can trap them in a cycle of minimum payments. Those payments, counselors say, barely touch the principal debt.
“If you’re falling behind on your credit cards, there’s a way out,” Ceccarelli and other counselors stress. The catch is that it has to start with looking directly at what you owe and what it’s doing to you.
Start by getting a clear picture
When working with a new client, a credit counselor will review their finances, including any debts. Codi Morris, a certified credit counselor based in Ohio, says people can do a similar audit on their own by listing their current credit card balances, interest rates, and minimum payments.
From there, Morris says, the priority is to figure out which debt is doing the most damage. Credit cards with the highest interest rates tend to drain the most money. so counselors often suggest using the avalanche debt payoff method first. With avalanche. you pay more than the minimum due on the credit card with the highest rate while still paying the minimum on your other cards. Once the highest-rate card is paid off, the process moves to the second-highest rate, and so on.
For some people, counselors say the snowball method can also help—paying off balances from smallest to largest. That approach can produce quicker wins as you start tackling the debt, which can be motivating for those who need momentum.
But these payoff strategies depend on whether there’s extra money available.
Tom Eichas, a certified credit counselor in Florida, says the plan doesn’t work when people find they don’t have the money to spare—even if the goal is to put “even a couple hundred dollars extra” toward the principal debt.
When that’s the case. Eichas recommends getting outside help by reaching out to a nonprofit credit counseling agency and working with a credit counselor. He says counselors are used to seeing a wide range of situations. “We have clients that are 88. and we have clients that are 18. and just because they have a lot of credit card debt doesn’t mean they’re bad people. ” he says. “Sometimes hardships just happen. Life happens. But we have an opportunity for them.”.
Lower the interest rate to stop the bleeding
Counselors say reducing interest is often the most important step because it changes how quickly debt grows.
Ceccarelli says counselors will typically enroll clients in a debt management plan, or DMP, which lumps credit card balances into a single payment with a reduced interest rate. She calls interest rates “the most powerful mechanism” keeping consumers in debt.
A DMP generally doesn’t require a credit check, and counselors say you’ll only pay a small enrollment and monthly fee. The tradeoff is that you won’t be able to use your credit cards while enrolled in the plan.
Another option counselors discuss is debt consolidation—rolling high-interest debts, like credit cards, onto a lower-interest product, such as a debt consolidation loan. The idea, Morris says, is to make the debt easier to pay off.
Before taking on a consolidation loan, Morris suggests calling creditors to ask about hardship options. “In some cases, clients use that loan to pay off the creditors who would have been willing to work with them, while still being left with debts that are harder to resolve,” she says.
Credit card companies may also offer reduced interest rates or other favorable terms, such as a payment plan. Counselors stress that any agreement should be put in writing.
Don’t wait after a charge-off
The danger, counselors say, is not only falling behind—it’s assuming that being charged off ends the story.
Eichas says one common mistake clients make is thinking that once a lender charges off a debt. they’re officially in the clear. In fact, he says, that’s when things can start to escalate. “Debt buyers buy up debt very quickly these days,” he says. “And once they have it. they can engage in all kinds of collections activity. including suing. getting a judgment and enforcing a judgment based on state laws where the client lives.”.
The consequences of judgments can be harsh, he says. They can include wage garnishment, a bank levy, or even a lien on your property.
If a debt has been sold to a collections agency or other debt buyer, Eichas says it’s important to verify whether the debt is accurate and then map out a plan to deal with the debt collector. That can include proposing a payment plan or settling the debt for less than what is owed.
He also warns that anyone who receives notice of a lawsuit should respond by the deadline to avoid a default judgment. An attorney can help navigate a lawsuit. and some offer free or low-cost help. but the key is acting instead of waiting. Morris adds that reaching out is often the hardest part because credit card debt carries heavy shame.
“There’s so much shame around credit card debt,” she says. “But what I’m seeing is that it’s often tied to rising costs and financial pressure, not just overspending. I want people to know that reaching out for help isn’t a sign of failure, it’s a step toward taking control.”
credit card debt delinquencies Federal Reserve Bank of New York credit counseling debt management plan DMP avalanche method snowball method debt consolidation hardship options debt collectors judgments wage garnishment
Gas prices again I guess.
This doesn’t surprise me. Everyone keeps saying just pay it off but how when everything else is up too. Credit cards are basically the only option for a lot of people now.
So wait, delinquencies are at 15-year highs but it’s gas prices that did it? I thought it was like the banks making interest “worse” or whatever. Also 90 days past due sounds like they’re already late later than normal. Kinda feels like the article is saying the economy is fine and then secretly not fine.
I feel like counselors always say the same thing—”another one-two punch”—but okay? Like what are we supposed to do, magically stop using credit? My cousin said her card jumped rates after she was late once, so then she’s stuck paying interest forever. And if gas is spiking, of course people shift money from groceries or rent and then everything spirals. Not even shocked it’s the highest in 15 years, just sad.