As a tradeline company who is constantly keeping tabs on everything related to credit, we tend to have an eagle eye on things that affect our buyers and sellers. This includes interest rates, the actions of auto lenders, what mortgage lenders are doing or saying, economical statistics, and much more. Recently, we've noticed the biggest problem area to be with credit cards themselves. Let's lay out a few of the facts before touching on each in a bit more depth.

  • Credit card delinquency has doubled in only 4 Months (from the end of 2023 to the end of Q1 in 2024)
  • Interest rates on credit cards now average 21.6%, an all-time high
  • Nearly one-fifth of credit card holders are using at least 90% of their available credit

While these numbers may be shocking, they're not very surprising to us. The writing has been on the wall for some time now for anyone paying attention. This has also changed the shape of the credit card tradeline industry in several ways. Cardholders are often having to pay for more expensive cards with higher limits to make a impactful difference on their credit score because their balances are higher. Others are paying more simply because high-quality tradelines are in sharp demand. On the other end of the spectrum, cardholders who are selling to authorized users are making more money than ever.

Whether you're seeking tradelines for sale or making money selling tradelines, the current state of the credit card economy is definitely having an effect on you. And even if you have nothing to do with buying tradelines or selling tradelines, the sky-high interest rates are probably not putting a smile on your face.

Let's take a peek at exactly what's happening here, and what can be learned from it.

Credit Card Delinquency Has Doubled In Only 4 Months

Yes, in just 4 months, the amount of credit card delinquency has more than doubled. As mentioned in a very informative article by USA Today, credit card delinquency at the end of the first quarter of 2024 stood at 6.9%. At the end of 2023 (yes, just 4 months prior) the overall delinquency rate was at 3.1%.

While it may not look or sound like a lot, doing a bit of simple math shows us that delinquencies are up by a whopping 122%. And for clarification, "delinquent" payments are defined by those who are at least 30 days late on their last payment. In other words, this isn't a situation where people are simply paying a bit late. This is a situation where people are seriously falling behind. But there's more. The 6.9% comes directly from federal reserve data which states that 6.9% are seriously delinquent. That means those accounts are at least 90 days past due. This is a curiously large number in our opinion, and it really caught our attention. After a little research, it turns out this is  the highest level since 2011. Surely this won't be an easy one to reverse, so expect the unexpected.

Interest Rates On Credit Cards Now Average 21.6%

At an all-time-high, credit card interest rates are now averaging at 21.6%. That's not exactly the news you wanted to hear if your credit card is maxed out (or if you're in the 6.9% mentioned in the section above). But even if your cards aren't close to their spending limits, this record-high is enough to make an interest-hater's head spin.

But why are the rates so high? Well, there are several things at play here. The economy, inflation, and changes in FED interest rates definitely have an influence on credit card interest rates. Additionally, unlike other types of credit, credit cards aren't limited with certain restrictions offered by consumer protection rights. Credit card companies can pretty much push the interest rates as high as they want. With that said, if they go too high, people won't want to use them and more cardholders will default. Too put it simply, the banks most likely seek to maintain credit card interest rates at a fine balance between what the public is willing to accept, and the optimal area of profit.

Nearly One-Fifth Of Cardholders Are Using At Least 90% Of Their Credit

This is another sign that people are having a hard time making ends meet. If 20% (one-fifth) of credit card holders are using at least 90% of their limit, that means they're maxed out. With high interest rates and card delinquency at record highs, the last thing you want is to have your cards pushed to their limits.

First, maxed out credit cards give you almost no leverage to acquire extra credit because lenders don't want to see utilization rates so high. Second, it pushes down your credit score. Third, it makes it much more difficult to make repayments and manage your cards in a reasonable and responsible manner because of the high monthly payments and continually accruing interest. You can pay and pay, but you still don't get anywhere. However, a lot of people have turned to using credit cards as a means of meeting their monthly costs like gas, food, and even rent because money is tight and they don't have other options.

Situations like these mentioned above - whether due to poor credit management or things that are completely out of our control such as inflation or rising interest rates - are exactly why it's so important to have a solid understanding of credit and practice responsible use of your income. Being educated on the fundamental principals of managing credit can help you in almost any circumstance.

Good Credit, Good Financial Health, And More

While nobody want to be in debt, sometimes it's unavoidable. Accidents happen, emergency expenses arise, and sometime our urge to spend money we just don't have gets the best of us. But with the correct intent and knowledge of managing your finances, you will generally find that you live with much less stress and more ability to create wealth - even if it's a long & slow process.

If you've done good, gotten lucky, or just been meticulously strict about managing your credit cards, you'll probably not be relating to this story very well. If that's the case, and depending on your perspective, you may be able to relate to utilizing your good credit history to your advantage. You can actually help others and make money while doing it - believe it or not! How? By simply selling tradelines to people who need to improve their credit scores and enhance their financial future. You can learn more about it on our website or one of our many blog articles.

How things will play out for consumers and the economy over the remainder of this year is anyone's guess. For what it's worth, we don't have any particular reason to believe credit card interest rates are going to be dropping down significantly any time soon. As always, we'll keep you updated on the situation as throughout the coming months or if major changes arise.