American Credit Card Loan Defaults: What To Know
A report published by Fox Business detailed how credit card loan defaults hit the highest rates in 14 years in 2024.
Lenders wrote off more than $46 billion in “seriously delinquent credit card loans in the first three quarters of 2024,” a 50% increase from the same time period the year prior, and the highest since 2010, according to the report.
“Although inflation is slowing and wages are starting to rise, inflation is still squeezing people’s budgets,” Mary Eschelbach Hansen, a professor of economics at the American University in Washington, D.C., told MarketWatch in 2023 when the credit card debt crisis started to garner more public media attention.
Household debt climbed to new highs of $17.94 trillion, with mortgages at $12.59 trillion, auto loans at $1.64 trillion and student loan balances reaching $1.61 trillion. The crisis is likely going to hit the bottom third of U.S. consumers, as high-income households are “fine,” according to Moody Analytics’ Mark Zandi.
What Will The Economy Do In 2025?
We’ve just about staved off a recession in 2023 and 2024. Now it looks like we should be heading into a year of economic expansion in 2025, according to experts who spoke to Nasdaq. “Recession fears have diminished, inflation is trending back toward 2%, and the labor market has rebalanced but remains strong,” Goldman Sachs chief U.S. economist David Mericle said in Nov., adding that the Republican plan for more tariffs, tighter immigration policies and extension of tax cuts should see GDP rise by 2.5%.
There are deep concerns about financial distress for households across the U.S. in 2025, but the level of debt doesn’t necessarily spell disaster for the entire financial system.
