US credit card defaults soar to highest level in 14 years
Published On Dec 30, 2024, 2:43 PM
According to a recent report, U.S. credit card defaults have surged by 50% in 2024 compared to the previous year, reaching the highest level since 2010. Over $46 billion in seriously delinquent credit card loans were written off in the first nine months of 2024. This increase is attributed to many consumers, especially those in the lower income brackets, being unable to keep up with their credit card payments amid rising debts and inflation. Overall household debt has also reached a new high of $17.94 trillion, indicating that financial stress is spreading among a wider range of consumers.
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The increasing rate of credit card defaults could lead to tightening lending practices from banks and higher borrowing costs as lenders become more cautious. This suggests that financial institutions heavily involved in consumer credit could face profitability issues due to rising delinquency rates. Additionally, credit card companies that are reliant on interest income from cardholders may see reduced revenue as defaults rise.