U.S. Consumers Brace For Financial Turmoil In 2025 As Credit Card Defaults Jump

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Title : U.S. Consumers Brace For Financial Turmoil In 2025 As Credit Card Defaults Jump
Link : U.S. Consumers Brace For Financial Turmoil In 2025 As Credit Card Defaults Jump

The financial pressures on American consumers have reached a boiling point as defaults on credit card loans hit their highest levels since the aftermath of the 2008 financial crisis. The combination of persistent inflation, rising interest rates, and diminishing savings has created a perfect storm, particularly for lower-income households as we enter 2025.

Credit card lenders wrote off $46 billion in seriously delinquent loans during the first nine months of 2024--a staggering 50% increase from the same period in 2023, according to BankRegData. This marks the highest level of defaults in 14 years. Write-offs, a key indicator of financial distress, signal that lenders are increasingly deeming many loans as unrecoverable.

Mark Zandi, head of Moody's Analytics, emphasized the disparity in financial stability: "High-income households are fine, but the bottom third of US consumers are tapped out. Their savings rate right now is zero. "Credit card balances have soared in recent years, with a combined increase of $270 billion in 2022 and 2023, pushing total balances above $1 trillion for the first time in mid-2023. Meanwhile, elevated interest rates have exacerbated the financial strain. Over the past year, Americans paid a record $170 billion in credit card interest, further depleting the savings that many accumulated during the pandemic. (Read More)