Credit Card Defaults Soar to Highest Level Since 2008

By /

U.S. credit card defaults have climbed to their highest levels since 2008, signaling trouble for many working families.

Key Facts:

• Lenders wrote off $46 billion in severely late credit card debt in the first nine months of 2024.
• That figure is up 50% from the same period in 2023.
• Consumers in the U.S. now hold over $1 trillion in revolving credit, with $37 billion past due by at least one month.
• CapitalOne’s annualized credit card write-off rate rose to 6.1% in November, compared to 5.2% last year.
• Inflation and higher interest rates have contributed to a $270 billion rise in credit card debt since 2022.

The Rest of The Story:

Some analysts, such as Mark Zandi of Moody’s Analytics, believe that low-income households are hardest hit.

He points out their savings rate has fallen to zero, leaving them vulnerable to financial shocks.

Others, like Odysseas Papadimitriou from WalletHub, see rising delinquencies as a sign that more difficulties may be on the way.

Credit card balances exploded during and after the pandemic as borrowers used extra cash and new lines of credit.

Over the past year, Americans paid $170 billion in credit card interest, in part due to higher rates set by the Federal Reserve.

Commentary:

Many believe “Bidenomics” has contributed to inflation pressures that make it tougher for the average person to make ends meet.

Prices at the gas pump, grocery store, and other essentials have all increased, and higher credit card payments add to the squeeze.

The expectation of a Trump presidency might bring relief, especially if his policies reduce spending or cut taxes for families.

However, any shifts in policy will take time, and families already burdened by rising debt may not see immediate benefits.

The Bottom Line:

Credit card defaults are climbing because many households are under financial strain.

READ NEXT: Two Men Dead After Searching For Sasquatch in a National Forest

While new leadership may bring hope, relief might not come soon enough for those already feeling the crunch.