Credit card borrowers increasingly hitting their credit limit and facing delinquency

TAMPA, Fla. — Americans have never shied away from using their credit cards. But for many, those bills are coming due, and some are maxed out while others fight delinquency.

According to the New York Federal Reserve Bank, in the first quarter of the year, 18% of those using credit cards are using at least 90% of their available credit. The high usage rate comes as delinquencies also accelerate.

Credit card delinquencies have now risen past pre-pandemic levels, reflecting an economy where some are struggling to meet their basic needs. It also starts a vicious debt cycle for many.

The average credit card interest rate is over 20%, and for the 44% of borrowers who carry credit card debt from month to month, that can create a financial disaster.

For example, on an average balance of $6,360, the interest amount alone would total $9,500 and could take up to 20 years to pay off, NPR reported.

Breaking it down by age group, younger card users are carrying a smaller balance than other age groups ($760), but also have the highest amount of borrowers maxed out (15.3%).

Unfortunately for every borrower, the New York Fed said things could get worse.

"If these trends continue and other factors influencing delinquencies remain the same, credit card delinquencies are likely to continue to rise," the New York Fed wrote.

With the increase in delinquency and maxed-out borrowers, bankruptcies are also on the rise in Florida.

The Middle District of Florida Federal Court found that in the first quarter of 2024, bankruptcies in the area were up 22%. In fact, bankruptcies in the Middle District of Florida were 60% higher in April 2024 versus April 2022.

All of the data continues to paint an economy where those who have the most and some businesses are continuing to thrive. But for most of America, the bills keep growing, and wages can't keep up.