Experts are sounding the alarm over a new report showing that credit card loan defaults have skyrocketed this year, warning that the dam of American consumer debt at a record high is bursting.
In the first nine months of 2024, lenders wrote off more than $46 billion in seriously delinquent credit card loans, according to a report in the Financial Times citing data analyzed by BankRegData.
This is a 50% increase from the first three quarters of 2023 and the highest since 2010.
Mark Zandi, head of Moody's Analytics, told the FT: “High-income households are doing well, but the bottom third of American consumers are being exploited.” “Their current savings rate is zero.”
Pointing out the survey results, Kobeissi letter declared in X“The credit card debt bubble is bursting.”
The New York Fed reported last month that Americans' credit card debt hit another record high in September, reaching $1.17 trillion in the third quarter, the highest level in Fed data since 2003. did.
According to the report, in addition to outstanding home loans ($12.59 trillion), auto loans ($1.64 trillion), and student loans ($1.61 trillion), total household debt also hit a record high of 17.94 trillion. reached a billion dollars.
In a conference call to discuss the report after it was released, New York Fed researchers said they found an increase in overall debt balances, a sustained and “concerning” increase in auto loan and credit card delinquencies, stress and We discussed how high delinquency rates are concentrated among young people. borrower.
One researcher said, “During the past few years, there has been a marked increase in delinquencies, especially for credit cards and car loans.'' “This is something we have been pointing out as a reason for concern, and it is something to note.”
They noted that consumers are paying more on credit cards and car loans, partly due to inflation and rising interest rates.
