Credit card delinquencies are surging — and rising fastest in this California city
Credit card delinquencies are rising fast in Chula Vista, San Francisco
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A growing number of Californians are struggling to pay their credit card bills as they continue to battle steep interest rates and high inflation.
New findings published by WalletHub, a personal finance platform, show that several California cities are leading the nation in an uptick in credit card delinquencies.
Chula Vista – a San Diego suburb with a population of about 279,000 – saw the biggest increase in credit card delinquencies, which surged nearly 85% during the first quarter of 2024 compared to a year earlier. The city edged out Madison, Wisconsin, and Garland, Texas, for the No. 1 spot.
The median age of a Chula Vista resident is 36, and the typical household income is about $102,000 a year, according to Data USA.
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A growing number of Californians are struggling to pay their credit card bills. (Angus Mordant/Bloomberg via Getty Images)
"One reason why Chula Vista’s delinquency rate is increasing so much is that its residents are simply borrowing more," the report said. "Residents of Chula Vista added the sixth-most credit card debt over the past year, along with the second-highest overall balance. Consequently, many people find it hard to pay their bills."
San Francisco ranked in fourth place with an 84% jump in delinquencies.
Other California cities that made the list include Irvine, Santa Ana, Long Beach, Riverside and Fresno.
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Most households have seen their monthly expenses rise as the result of the ongoing inflation crisis. Although the consumer price index has fallen from a peak of 9.1%, it remains higher than pre-pandemic levels. And when compared with January 2021, before prices began to spike, inflation is up nearly 20%.
A growing number of Californians are struggling to pay their credit card bills. (Justin Sullivan/Getty Images)
The WalletHub findings come after the New York Federal Reserve released new data revealing that millions of Americans are falling behind on their monthly credit card payments.
The flow of credit card debt moving into delinquency hit 8.9% in the first quarter at an annualized rate, above pre-pandemic levels. In fact, the percentage of credit card balances in serious delinquency – payments are at least 90 days late – climbed to its highest level since 2012.
The rise in credit card usage and debt is particularly concerning because interest rates are astronomically high right now. Average interest rates on credit cards have already surged from 16% in February 2022, before the Fed began hiking rates, to 20.67% as of Wednesday, near a record high, according to a Bankrate database.
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Even just a minor change in credit card rates can affect how much Americans owe.
For instance, if you owe $5,000, which the average American does, current APR levels would mean it would take about 277 months and $7,723 in interest to pay off the debt by making the minimum payments. By comparison, that same amount of debt would have taken 269 months and $6,126 to pay off when interest rates were lower.