Credit card default rates in the U.S. have reached their highest level since 2010, highlighting the financial strain on low-income consumers amid prolonged high inflation. According to industry data from BankRegData, $46 billion in severely delinquent credit card loans were written off in the first nine months of 2024, marking a 50% increase from the previous year and the highest level in 14 years.
Capital One's (COF, Financial) credit card write-off rate rose to 6.1% from 5.2% a year ago, indicating increasing financial distress among consumers. WalletHub's research shows that 74.5% of consumers carry some credit card debt, with the figure exceeding 90% for those living paycheck to paycheck. This suggests financial pressure is widespread across income levels.
Analysts warn that the combination of economic stress and spending habits could lead consumers into a debt cycle, potentially resulting in personal bankruptcies. Credit cards remain one of the most expensive borrowing options, with interest rates exceeding 20%.
