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Credit Card Defaults Reach Highest Levels Since 2008 Great Recession – One America News Network


SAN ANSELMO, CALIFORNIA - FEBRUARY 07: In this photo illustration, Visa credit cards are displayed on February 07, 2024 in San Anselmo, California. According to a report by the Federal Reserve Bank of New York, credit card debt in the United States has reached $1.13 trillion. (Photo Illustration by Justin Sullivan/Getty Images)
This photo illustration shows Visa credit cards in San Anselmo, California on February 07, 2024. A report from the Federal Reserve Bank of New York indicates that U.S. credit card debt has escalated to $1.13 trillion. (Photo Illustration by Justin Sullivan/Getty Images)

OAN Staff James Meyers
1:22 PM – Monday, December 30, 2024

As reported by the Financial Times, defaults on U.S. credit cards have surged to their highest levels since the onset of the 2008 Great Recession, indicating that lower-income Americans are facing significant hardships after years of elevated inflation.

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Credit card issuers have written off an astounding $46 billion in seriously overdue credit card balances within the first nine months of this year, marking a 50% rise compared to the same timeframe last year, according to BankRegData.

Throughout 2023, banks and retailers collectively forgave nearly $60 billion in all consumer credit card debt. Furthermore, Americans’ credit card balances exceeded $1 trillion for the first time midway through 2023, with consumers currently carrying $37 billion in overdue credit card payments of one month or more.

“High-income households remain stable, but the bottom third of U.S. consumers are financially strained,” states Mark Zandi, head of Moody’s Analytics. “Their current savings rate is zero.”

“The ability for consumers to spend has been significantly impacted,” adds Odysseas Papadimitriou, WalletHub’s head of consumer credit research. “Delinquency rates suggest that more difficulties are on the horizon.”

Data from CapitalOne, ranked as America’s third-largest credit lender following JPMorgan Chase and Citigroup, indicates an annualized credit card write-off rate of 6.1% in November, up from 5.2% a year prior.

Consumers are grappling with the repercussions of inflation, which has contributed to a $270 billion increase in credit card balances over the past few years. The Federal Reserve has maintained high borrowing costs, placing consumers in a challenging position when it comes to financial management.

In the past year ending in September, larger credit card balances have resulted in Americans incurring $170 billion in interest payments.

This follows last week’s announcement from the Federal Reserve, suggesting that they are unlikely to reduce the Fed funds rate by a full percentage point in 2025, with adjustments more likely to be limited to 50 basis points, or half a percent.

Though banks have not yet disclosed their fourth-quarter results, early indicators reveal that consumers are significantly behind on their financial obligations.

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