More Americans are struggling to pay their credit cards, and what’s holding them back is only getting worse
Late payments on credit-card debt remain on the rise.
This contrasts the trend in other forms of credit including auto loans and mortgages, where late payments of 30 days or more are on the decline.
Michael Pearce, an economist at Capital Economics, said higher interest rates have left more families struggling to pay promptly.
Paying off credit-card debt on time is one of the most important ways to maintain a good credit score.
It’s getting more expensive to borrow from banks in America, and some credit card holders are struggling to keep up.
Interest rates, which influence the cost of borrowing, are on the rise after the Federal Reserve kept them near zero for years. That period of super-low interest rates achieved one key outcome: encouraging Americans to borrow, spend, and help grow the economy after the Great Recession.
Last June, credit-card debt finally hit a new high. But the share of borrowers who make payments more than 30 days late is rising as interest rates rise.
“That stands in stark contrast to the trend in delinquency rates on other forms of lending, which are either flat or falling,” Michael Pearce, a senior US economist at Capital Economics, said in a note on Monday.
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AKIN OYEDELE
Business Insider
MAY 22, 2018, 12.01 AM
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