Late Credit Card Payments Hit Record Highs, Again

More late payments than ever this year

Are you behind on your credit card bills? You’re not the only one.

A credit rating agency says that delinquency rates on credit card payments hit record highs for the second straight month.

Season of the late payment

Fitch’s Prime Credit Card Delinquency Index keeps track of credit card debt that is delinquent by more than 60 days. The index shows that 4.04 percent of credit card bills through January were more than 60 days late. December set the previous record at  3.75 percent.  The current rate is 30 percent higher than historical averages.

The agency started keeping the index in 1991. Over the past three months, the rate of delinquent accounts has made its biggest jump ever, rising 23 percent.

A cycle of bad credit

Consumers are already having a tough time securing personal loans and other types of credit. When card-holders make late credit card payments, that drives down their credit score.

A lot of effort is being put forth to encourage banks to start lending again. Right now banks are even reluctant to lend to people with good credit. As more people’s credit scores head downhill, they give banks more reason not to lend.

Not enough to give

The index also shows that people are paying smaller percentages of their bills. In 2006 and 2007 card holders paid off an average of 20 percent of their bill each month. Now, that has fallen to 17.5 percent. People are trimming their budgets in every way they can. Unfortunately, for people who can’t pay their credit card bills at all and end up in delinquency, there is more bad news to come.

Changing attitudes?

It’s possible that even after the recession, people might not be seeking credit for a while. I can’t help but wonder if people have given up on making their credit card payments because they have given up on credit altogether. If a person had given up on the idea of ever using credit again, that might leave them with little motivation to pay their credit card bills.

But those bills will only get bigger and eventually end up at collections agencies. Eventually the big ones will end up in court.