Americans defaulted on their credit card loans at levels not seen since 2010, the Financial Times reported Monday.
Credit card lenders wrote off $46 billion in seriously delinquent loan balances in the first nine months of 2024, according to a Financial Times report citing industry figures from BankRegData. That is an increase of 50% from the same period in 2023 and the highest level in 14 years.
“High-income households are fine, but the bottom third of US consumers are tapped out,” Mark Zandi, the head of Moody’s Analytics, told Financial Times. “Their savings rate right now is zero.”
Americans’ credit card debt climbed to $1.17 trillion during the third quarter of 2024, according to a November report from the Federal Reserve Bank of New York. Credit card delinquencies remained high in the third quarter, with 3.5% of outstanding debt in some stage of delinquency, according to the New York Fed.
Mortgage balances reached $12.59 trillion at the end of September, while auto loan balances increased by $18 billion and stood at $1.64 trillion, according to the report. Household debt ticked up to $17.94 trillion in the third quarter, according to the New York Fed.
Many Americans have been struggling with steep prices and high inflation rates under the Biden-Harris administration. While inflation has cooled since hitting a peak of about 9.1% in June 2022, rates remain high. The consumer price index, a broad measure of the price of everyday goods, rose 2.7% in November from a year earlier, up from 2.6% in October, according to the Bureau of Labor Statistics (BLS).
Despite inflation remaining stubborn in recent months, President Joe Biden has repeatedly touted his economic legacy. Some experts have attributed excessive government spending under the Biden-Harris administration to fueling inflation rates. The national debt was $35.46 trillion as of Tuesday.
While on the campaign trail, President-elect Donald Trump proposed the idea of putting a temporary cap of 10% on credit-card interest rates to allow people to “catch up” on their debt, saying that “we have no choice” but to do it, Business Insider reported. Sen. Bernie Sanders has expressed support of the idea of credit card interest rates, calling it a “great idea” in a post on X.
“During the recent campaign Donald Trump proposed a 10% cap on credit card interest rates,” Sanders said in the post. “Great idea. Let’s see if he supports the legislation that I will introduce to do just that.”
The economy was a top issue for voters in the 2024 presidential election. A Gallup poll published Oct. 9 found that the economy was the most important issue for voters ahead of the presidential election, with 52% of those surveyed saying that the candidates’ positions on it were an “extremely important” influence on their vote.
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