Credit Card Defaults in the U.S. Reach Highest Level Since 2010

According to news from Foreks, data compiled by BankRegData indicates that delinquencies on U.S. credit card loans have reached their highest level since the 2008 financial crisis, showing that the financial health of low-income consumers has deteriorated after years of high inflation.

Credit card issuers wrote off $46 billion in credit balances during the first nine months of 2024, a 50% increase compared to the same period the previous year, marking the highest level in 14 years.

Charge-offs, which occur when lenders decide that a borrower will not be able to repay their debt, are a closely monitored indicator of significant credit stress.

Mark Zandi, President of Moody's Analytics, stated, "High-income households are doing well, but the bottom third of U.S. consumers are exhausted. Savings rates are currently at zero."

The sharp rise in delinquencies is a sign of how badly consumers' personal financial situations are deteriorating after years of high inflation and the Fed maintaining high borrowing costs.

Banks have yet to report fourth-quarter figures, but initial signs indicate that a growing number of consumers are significantly behind on their debts.

Capital One, the third-largest credit card issuer in the U.S. following JPMorgan Chase and Citigroup, recently announced that its annualized credit card cancellation rate, meaning the percentage of total loans marked as uncollectible, rose from 5.2% a year ago to 6.1% as of November.