Credit Card Defaults Hit Highest Level Since 2010

The Financial Times is reporting that card lenders wrote off $46 billion in seriously delinquent loans in the first nine months of 2024—a 50 percent increase from 2023 and the highest level since 2010. The write-offs occur when lenders conclude it’s highly unlikely a borrower will repay their debts, and are considered a measure of major loan distress as consumers feel increasingly stretched.

“High-income households are fine, but the bottom third of U.S. consumers are tapped out,” said Mark Zandi, the head of Moody’s Analytics, according to PYMNTS. “Their savings rate right now is zero.” The steady increases in defaults reflects the financial pressure felt by consumers amidst years of high inflation and borrowing costs.

Though banks have not released fourth-quarter earnings, there are signs that consumers are increasingly falling behind. Capital One recently said that its annualized write-off rate for credit cards hit 6.1 percent, up from 5.2 percent in 2023.

PYMNTS Intelligence found earlier this month that 74.5 percent of consumers carry credit card debt, a rate consistent across income levels. However, that percentage shoots to 90 percent for consumers living paycheck to paycheck and facing difficulty paying their bills.

The average outstanding balance among paycheck to paycheck consumers with difficulties paying their bills is $7,038, compared to $5,766 for cardholders without those challenges. The average falls to $3,202 for financially stable cardholders.

Federal Reserve data shows U.S. credit card debt climbing to $5.113 trillion in October, compared to $5.093 trillion in September. “Reported rejection rates for credit cards, mortgages, auto loans, credit card limit extension applications and mortgage loan refinance applications all rose in 2024,” the New York Federal Reserve said in a press release.