Credit card default rates in the United States have reached a 14-year high. According to Financial Times, a significant increase in unpaid credit card debts has been observed.
Rising Total Debt Write-Offs
In the first nine months of 2024, lenders collectively had to write off $46 billion in severely delinquent loans. Data compiled by the Federal Deposit Insurance Corporation (FDIC) and BankRegData indicates that this figure represents a 50% increase compared to the previous year.
According to BankRegData, Capital One customers are facing the highest credit card default rates. The total amount in default, which stands at $7.68 billion, corresponds to 5.36% of credit card loans. Citi Bank follows with a 2.93% default rate amounting to $4.79 billion. Other banks, including Synchrony Bank, JPMorgan Chase, Discover Bank, and Bank of America, are experiencing similar challenges in debt repayment.
Economic Context of the U.S.
The rapid increase in credit card debt is viewed as an indicator of strained consumer finance following rising inflation and interest rates. Mark Zandi, President of Moody’s Analytics, noted that an increase in overall credit card debt signals a decline in consumer spending power.
“High-income households are doing well, but the bottom third of U.S. consumers are financially struggling. Current savings rates are at zero.” – Mark Zandi, Moody’s Analytics
Economic indicators reveal…
