Americans are falling behind on their bills. Wall Street is alarmed.

Shares of consumer-lending companies slid this past week after executives raised warnings about lower-income borrowers who are struggling to make payments. Dour remarks from banking executives at the Barclays banking conference rattled investors, who were already on edge about the health of the U.S. economy.

Investors have been on high alert for any clues that a recession is in store after two years of higher interest rates. The Federal Reserve is expected to start lowering rates at its meeting this coming week, but some investors fear it might have waited too long.

Here is what bank executives are telling us about how people are faring.

Watching those credit-card bills

On top of soaring prices for groceries and just about everything else, people have been dealing with higher interest rates on their credit cards. The average rate as of May was 21.51%, according to Fed data, up from around 15% in 2019.

That helps explain why some are finding it harder to keep up with payments, particularly those who don’t earn so much. Around 9.1% of credit-card balances turned delinquent over the past year, the highest rate in over a decade, according to an August report from the Federal Reserve Bank of New York.

“In general, this has been a bigger issue for people in the bottom half of the income spectrum," said Moshe Orenbuch, an analyst at TD Cowen.

Mark Mason, chief financial officer at Citigroup, said at the Barclays conference that his bank has seen delinquencies picking up and more consumers carrying balances. Where there is growth in spending, he said it is driven primarily by Citi’s affluent customers.

Earlier this summer, JPMorgan Chase and Discover Financial Services executives said lower-income consumers were spending more cautiously.

The credit-card issuer Bread Financial, which serves more lower-income borrowers than bigger banks, said at the conference it expects elevated charge-off rates for the rest of 2024, while Synchrony Financial said it is seeing higher charge-off rates than before the pandemic.

Charge-off rates refer to the balances that card issuers write off because borrowers are unlikely to pay them.

“What that tells you is if people do get behind on their payments in this environment, it’s tougher to get out of them," said Orenbuch of TD Cowen.

Synchrony added that there has been a pullback in spending on bigger-ticket home purchases, as well as cosmetic and Lasik procedures.

Rising delinquencies are inevitable after years of decrease during the pandemic, and “generally speaking, the consumer is fine," said Jason Goldberg, a Barclays analyst.

Struggling with car payments

The stock declines came after a warning about car payments.

Ally Financial Chief Financial Officer Russ Hutchinson said late payments and charge-offs on auto loans were higher than expected in July and August.

Borrowers at Ally, a major auto lender, “have been struggling with the cost of living and now are struggling with an employment picture that’s worse," Hutchinson said.

Ally’s shares fell 18% on Tuesday and have yet to recover.

Hutchinson’s comments worried investors because car payments are among the last bills people stop paying because they need their vehicles to get around.

The average interest rate on a 60-month loan for a new car was 8.2% as of May, according to Fed data, up from 5.3% in 2019.

Over the past year, roughly 8% of auto loans turned delinquent, according to the New York Fed, the highest rate in over a decade.

Some relief might be in store. Inflation has been drifting lower toward the Fed’s 2% target, and the central bank’s expected rate cuts over the next several months could help ease the rates on credit cards and car loans, though that isn’t guaranteed.

Write to Angel Au-Yeung at angel.au-yeung@wsj.com