Credit card defaults in the U.S. have surged to levels not seen since the Great Recession of 2008, highlighting financial struggles for many Americans. Lower-income households, in particular, are bearing the brunt of rising inflation and high borrowing costs, according to the Financial Times.
Credit card lenders wrote off $46 billion in delinquent balances during the first nine months of 2024, a 50% increase compared to the same period last year, per BankRegData. This sharp rise underscores a growing inability among consumers to manage mounting debt.
Average American makes $59K.
Has on average $250K in mortgage.
$25K in car loan.
$8K in credit card debt.
Less than $400 saved.
Works 50 hours. Has no health insurance.
He is angry right now, he wants better life. He wants more money. As simple as that.
— tic toc (@TicTocTick) December 29, 2024
The total U.S. credit card debt exceeded $1 trillion for the first time in mid-2023, with $37 billion currently overdue by at least one month. High-income households remain relatively unaffected, but Moody’s Analytics Chief Economist Mark Zandi warns that “the bottom third of U.S. consumers are tapped out.”
CapitalOne, the nation’s third-largest credit lender, reported an annualized credit card write-off rate of 6.1% in November, up from 5.2% a year earlier. Inflation and sustained high interest rates have compounded the financial strain, with consumers paying $170 billion in credit card interest over the past year.
🚨 The jump in US credit card defaults to the highest level since 2010 is a wake-up call! As consumers grapple with mounting debt, it's crucial to rethink our spending habits. Are we facing a new financial reality? 📉💳 Let’s discuss how to navigate thi https://t.co/XNKnnWUcPm
— Grand Panda (@grandiopanda) December 30, 2024
Odysseas Papadimitriou, head of consumer credit research at WalletHub, said the rise in delinquencies signals “more pain ahead.” The Federal Reserve’s decision to maintain high borrowing costs is further stretching consumers’ budgets, leaving many unable to keep up with debt payments.
While banks have yet to report their fourth-quarter earnings, early indicators suggest increasing numbers of consumers are falling behind on what they owe, raising concerns about broader economic implications.
