The Bubble Is Bursting: Delinquency Rates Have Doubled And Credit Card Defaults Are Soaring
Did you know that U.S. households are carrying $1.18 trillion in credit card debt? Considering the fact that the average rate of interest on credit card balances is now over 20 percent, that is not good news at all. Sadly, most of the country is just barely scraping by from month to month in this very harsh economic environment, and turning to credit cards for some relief can be extremely tempting. A thousand dollar credit card balance can turn into four or five thousand dollars in the blink of an eye, and once you get that deep into the hole it can be very difficult to ever dig yourself out. Of course if you end up losing your job or having a major medical emergency, that can be enough to push you completely over the edge financially. Today, that is happening to an alarming number of Americans.
For some perspective, let’s go back to the end of 2024. At that time, it was being reported that “credit card loan defaults soared this year”…
Experts are sounding the alarm over a new report indicating credit card loan defaults soared this year, warning the dam is about to break on Americans’ record-high consumer debt.
During the first nine months of 2024, lenders wrote off more than $46 billion in seriously delinquent credit card loans, according to a report from the Financial Times citing data analyzed by BankRegData. That’s an increase of 50% from the first three quarters of 2023, and the highest since 2010.
Unfortunately, this crisis has continued to intensify in recent months.
Delinquency rates have “hit the highest levels in more than a decade”, and this is especially true for younger borrowers…
Delinquency rates have doubled since the record lows of 2021. On one hand, this makes sense: Consumer credit has grown 20% since 2021. Stimulus-fueled excess savings drove down credit card balances during the pandemic, then, as the economy opened up, consumers depleted those savings. This has also reignited delinquencies.
But delinquency rates haven’t just rebounded — they’ve hit the highest levels in more than a decade. Even more concerning, the rate of credit card borrowers who transitioned to serious delinquency (90-plus days) is now at 2008 levels. Borrowers age 18-29 make up the biggest portion of this group.
This is starting to become a big problem for our banks.
In particular, small banks have been getting absolutely hammered by very high delinquency rates.
Let’s hope that we can get this turned around.
Our seemingly endless cost of living crisis is putting a tremendous amount of strain on our society, and even delinquency rates for high income households have been soaring…
Upper-income Americans are increasingly falling behind on credit card and auto loan payments, signaling an underlying vulnerability in the US economy as the labor market slows.
Delinquencies on such debts from those making at least $150,000 annually have jumped almost 20% over the last two years, faster than for middle- and lower-income borrowers, according to the credit-scoring firm VantageScore. A recent Federal Reserve Bank of St. Louis study found the share of people making late card payments in the highest-income zip codes has risen twice as much over the last year as in the lowest-income ones.
Are the facts that I just shared with you a sign that the economy is healthy or that the economy is unhealthy?
Needless to say, the answer is self-evident.
Despite what the talking heads on CNBC are telling you, the truth is that most of the nation is really struggling right now.
But no matter how much you are struggling, you should avoid going into credit card debt, because credit card debt is financial poison.
Unfortunately, today the average U.S. household is carrying more than $6,000 in credit card debt…
The average U.S. household has $6,120 in credit card debt.
Total U.S. household credit card debt is currently at $1.18 trillion, making up 6% of all household debt.
Washington, D.C., carries the highest level of credit card debt per capita at $5,360 on average, while Mississippi carries the lowest at $2,940 on average.
Americans aged 65 to 74 have more credit card debt than any other age range, coming in at an average of $7,720 in debt.
Can you guess what the average rate of interest on all of that credit card debt is?
I just asked Google AI, and I was told that the “average APR for all credit card accounts in Q2 2025 was 21.16%”.
Wow.
If you are paying more than 20 percent interest on a credit card balance, you are getting absolutely killed financially.
And “buy now, pay later” plans can be even worse.
At this point, those plans have become so lucrative that even Costco is getting in on the game…
Costco is now offering a buy-now, pay-later option for online shoppers through a new multi-year partnership with Affirm.
The installment plans will allow customers to select the payment option at checkout for purchases ranging from $500 to $17,500.
Customers will be checked for eligibility in real time and can choose a monthly payment plan that fits their budget.
I know that it can be so tempting to reach for a short-term solution.
But don’t do it.
You will always regret it later.
But I certainly understand why so many Americans are looking for an easy way out.
I shared this yesterday, but I felt that I should share it again today. A recent survey discovered that 83 percent of U.S. adults are experiencing “stressflation”…
A LifeStance Health survey released today reveals “stressflation” is affecting most Americans, with 83% reporting financial stress driven by inflation, mass layoffs, the rising cost of living and recession fears. Millennials and Gen Z report the most significant mental health impacts.
If you are stressed about your finances, you have lots of company.
Economic conditions are very painful, and more Americans are falling out of the middle class with each passing day.
Unfortunately, even more trouble is potentially on the horizon.
The U.S. and China still have not been able to reach a permanent trade agreement, and if that does not happen by the deadline both nations “are set to once again place historic tariffs on each other’s imports starting August 12″…
Chinese and American trade negotiators concluded their two-day meeting in Stockholm without a resolution to avert tariffs from skyrocketing back to ultra-high levels that formed an effective blockade on trade between the world’s two largest economies. But President Donald Trump’s trade advisers and their Chinese counterparts sounded a hopeful note.
Without an agreement, the United States and China are set to once again place historic tariffs on each other’s imports starting August 12.
We have about two weeks.
Hopefully negotiators will be able to work something out.
But even if an agreement is reached, so many other long-term trends are taking us in the wrong direction very rapidly.
Now is a time to get “lean and mean” financially, because I have a feeling that the economic news is going to get very “interesting” during the second half of this year.
Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
About the Author: Michael Snyder’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com. He has also written nine other books that are available on Amazon.com including “Chaos”, “End Times”, “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”. When you purchase any of Michael’s books you help to support the work that he is doing. You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter. Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites. These are such troubled times, and people need hope. John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.” If you have not already done so, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.
People have lived the high life for so long they don’t know any other way. I bought my pickup in 2001 brand new and still looks brand new and no payment. I have no desire for a new one. I made a nice pot of red beans and corn bread and love it. I started out making $2.25 an hour and have never wanted more than I can afford. It was hard in the early 70’s and 80’s recession and never wanted to be that way again. I didn’t have education which was bad for the era. I loved learning and studied about the Great Depression of the 30’s. People need to learn they don’t have to have a new car all the time and learn to cook. When we die there’s no taking it with you!
This is what the intentional, deliberate, and unilateral destruction of the economy looks like, which includes a complete collapse of the monetary system that is both unconstitutional (as if anyone has cared about that in decades, even centuries) and the sacking of the assets by the ruling class, who are swooning over the continued debt party in which the governance puppets have been actively engaged, per their scripted roles -- devaluing the pitiful, virtually worthless (97% devalued -- worth 3 cents???) dollar even further, while printing away and buying it back via the Treasury (the snake eats its tail). The consumers are getting raped financially as skyrocketing inflation (underreported since the numbers are constantly fabricated) continues and is exacerbated by ALL of the DJT Admin policies/practices & objectives, including the ongoing lie about tariffs being paid by anyone other then the end consumers who are shafted regularly and told to like it and even cheer for it. The temporary euphoria of the markets reflects the empty promises of the downward spiral of the debts and expenditures being allocated for war....it will not last, but the ruling class can abscond with more profits before foreclosures, bankruptcies, the "Great Taking" of investment assets pledged by investment companies are seized to pay their debts, and as bank deposits are held against the depositors "claims" against their funds....being creditors of last recourse...only to be granted when stablecoin (the means of total control) are instead substituted form the fiat paper now used. The new system is as feeble as the old, but it guarantees your behavior in exchange for conditional access via biometric ID -- something most must consider essential since they have no savings or they think that the money in their bank is either insured or somehow their property. Of course, other "conditions will also be imposed concurrent with the access to funds and other "privileges" as granted by the "benevolent" overlords. As a shadow of the once viewed as powerful and "independent" "nation state" known as the United States Inc reorganizes from its bankruptcy (morally, ethically, and financially) to become part of the North American Technate, as part of the regionalized, central governance apparatus that will superintend the affairs of the world with AI support and insights, it will be unrecognizable to anyone holding to the notion of democratic republic or a constitutionally-based "experiment". The faces of the architects of our demise hold titles and offices, but their masters are hidden from view, greedily and anxiously awaiting the final demise of what we once stood for and handed over to them willingly.