Ramsey Solutions' Jade Warshaw analyzes the latest economic data showing consumer credit card debt piling up amid a spending spree.
Experts are sounding the alarm about a new report that suggests credit card Loan defaults have soared this year, warning that the dam is about to break a record high for American consumer debt.
In the first nine months of 2024, lenders wrote off more than $46 billion in seriously delinquent credit card loans, according to a Financial Times report citing data analyzed by BankRegData. This is a 50% increase compared to the first three quarters of 2023 and the highest rate since 2010.
A woman has a credit card. (iStock)
Moody's Analytics head Mark Zandi told the FT: “High-income households are doing well, but the bottom third of US consumers have been left out. “Their savings rate is now zero.”
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“The credit card debt bubble is bursting,” declared The Kobeissi Letter in X, noting these findings.
particle for direct object New York Federal Reserve Americans' credit card debt hit an all-time high in September, hitting $1.17 trillion in the third quarter, the highest level recorded in Federal Reserve data dating back to 2003, it reported last month.
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The report showed that total household debt reached an all-time high of $17.94 trillion, along with mortgage balances ($12.59 trillion), auto loans ($1.64 trillion) and student loan balances ($1.61 trillion).
Credit card loan delinquencies rose 50 percent in the first three quarters of 2024 compared to the same period last year, prompting warnings that the “credit card debt bubble is bursting.”
In a call to discuss the report after its release, New York Fed researchers on the growth of total debt outstandings, persistent and worrisome growth in car loan and credit card delinquencies, and how stressors and high delinquency rates are concentrated among younger borrowers.
“We have seen a significant increase in delinquency flows over the past few years, particularly for credit cards as well as auto loans,” said one researcher. “That's something we've flagged as a cause for concern — something to watch out for.”
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They pointed to increased payments made by consumers on credit cards and auto loans, which were partly attributed to that. to inflation And also because of higher interest rates.