US credit card defaults at highest level since Great RecessionCredit card defaults in the US reached their highest level since the 2008 financial crash during the first nine months of 2024, according to figures compiled by BankRegData and cited in a recent Financial Times article. Credit card lenders were also forced to write off $46 billion in seriously delinquent debt balances through September 2024, up 50 percent from the same period the year before, and the highest level in 14 years.
These figures reveal widespread social distress and economic insecurity in America’s supposedly booming economy. With rising expenses and stagnant wages, tens of millions of workers and lower middle class people have been forced to rely on their credit cards to pay for food, gas, medicine, clothing and other living costs. Hit by elevated interest rates, they have not been able to make their credit card payments.
“High-income households are fine, but the bottom third of US consumers are tapped out,” said Mark Zandi, the head of Moody’s Analytics, told the Financial Times. “Their savings rate right now is zero.”
After government stimulus checks allowed borrowers to pay down their credit card debts in 2020 and 2021, credit card debt has risen by a combined $270 billion in 2022 and 2023, according to the Federal Reserve Bank of New York. It surpassed the $1 trillion mark in mid-2023 and reached $1.66 trillion in the third quarter of 2024. The average American household credit card debt was $10,757 in the third quarter, according to personal finance web site Wallet Hub.
“Nearly half of Americans still have debt from the holidays from last year,” said WalletHub writer and analyst Chip Lupo, adding that a third of respondents to his organization’s survey reported they would spend less this year on holiday shopping.
Unable to pay off their balances in full, borrowers sent the credit card companies $170 billion in interest payments in 2024. As of last Friday, the average credit card interest rate was 20.35 percent, according to Bankrate.
These loan shark rates have allowed the biggest credit card lenders—Visa, Mastercard and Capital One—to reap record profits. Visa, the largest, booked $19.7 billion in 2024 profits (up 16 percent from FY 2023) and enjoyed a 55 percent profit margin (up from 52 percent in FY 2023); 2024 revenues shot up 10 percent to $35.9 billion.
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