Defaults on U.S. credit card loans have reached their highest point since the aftermath of the 2008 financial crisis, signaling growing financial distress among lower-income consumers, according to data from BankRegData.

In the first nine months of 2024, lenders wrote off $46 billion in seriously delinquent credit card balances – a 50% increase from the previous year and the highest figure in 14 years. Write-offs, which indicate debts deemed unrecoverable, are considered a key indicator of financial strain.

“High-income households are fine, but the bottom third of U.S. consumers are tapped out,” said Mark Zandi, chief economist at Moody’s Analytics. “Their savings rate right now is zero.”

The spike in defaults reflects mounting pressure on personal finances, driven by years of persistent inflation and elevated borrowing costs maintained by the Federal Reserve.

Capital One, the third-largest U.S. credit card lender, reported that its annualized credit card write-off rate rose to 6.1% in November, up from 5.2% the previous year.

Rising balances and high interest rates have left many Americans unable to pay off their debts in full, contributing to $170 billion in interest payments over the past year. Despite the write-offs, $37 billion in credit card debt remains overdue by at least one month.

Delinquency rates peaked in July and remain nearly a percentage point higher than pre-pandemic levels. Analysts warn this could signal further economic challenges.

“Delinquencies are pointing to more pain ahead,” said Odysseas Papadimitriou, CEO of WalletHub.

Uncertainty looms as the Federal Reserve signals modest rate cuts in 2025, disappointing hopes for significant relief. Additionally, President-elect Donald Trump’s proposed tariffs could drive inflation and interest rates higher, adding to the financial strain on consumers in the coming year.

(YWN World Headquarters – NYC)