U.S. credit card defaults have surged to their highest levels since the Great Recession, highlighting financial struggles among lower-income households. BankRegData reports that $46 billion in delinquent balances were written off in the first nine months of 2024, a 50% increase from the same period last year.
Total credit card debt exceeded $1 trillion in 2023, with $37 billion overdue by at least one month. Inflation and high borrowing costs have placed significant pressure on household finances, leaving many unable to keep up with payments.
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’s annualized write-off rate rose to 6.1% in November, up from 5.2% in 2023. This mirrors broader trends across the financial sector, as delinquencies continue to rise.
Mark Zandi, chief economist at Moody’s Analytics, said lower-income households are facing the greatest challenges, with zero savings rates exacerbating their financial vulnerability. WalletHub’s Odysseas Papadimitriou warned that the rising defaults point to deeper economic problems.
🚨 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
Over the past year, Americans paid $170 billion in credit card interest, further straining budgets. The Federal Reserve’s decision to maintain high interest rates has left many struggling to manage their growing debt.
Banks are expected to release fourth-quarter results soon, with early data indicating a continued rise in delinquent accounts across the board.
