U.S. credit card defaults have hit their highest levels since 2008, a sign of mounting financial pressure on lower-income households. During the first nine months of 2024, lenders wrote off $46 billion in seriously delinquent balances, according to BankRegData, a 50% increase from the same period last year.
Total credit card debt surpassed $1 trillion in 2023, reflecting a sharp rise in borrowing amid persistent inflation. Of that, $37 billion in balances remain overdue by at least one month, underscoring the financial challenges many Americans face.
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
CapitalOne, the third-largest credit card lender, saw its annualized write-off rate rise to 6.1% in November, up from 5.2% a year earlier. This trend mirrors broader concerns about the rising cost of living and limited financial resources among consumers.
Mark Zandi of Moody’s Analytics noted that low-income households are under the greatest strain. “The bottom third of U.S. consumers are tapped out,” he said, pointing to zero savings rates among these groups. WalletHub’s Odysseas Papadimitriou called the delinquency trends a harbinger of worsening financial conditions.
🚨 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
Inflation and high interest rates are compounding these issues. Over the past year, Americans have paid $170 billion in credit card interest. The Federal Reserve’s decision to keep borrowing costs elevated has added to the pressure on struggling households.
Banks are expected to report fourth-quarter data soon, with early signs indicating an increase in delinquent accounts across the board.
