"The American economy is teetering on the edge of a financial precipice as credit card defaults soar to their highest level in 14 years. According to industry data compiled by BankRegData, card lenders wrote off $46 billion in seriously delinquent loans in the first nine months of 2024 — a staggering 50% increase over 2023. This alarming trend, reminiscent of the 2008 financial crisis, highlights the growing financial distress faced by millions of households across the nation.The surge in defaults is a direct consequence of years of elevated inflation, skyrocketing interest rates, and predatory fees that have left consumers increasingly stretched. For many Americans, credit cards have become a lifeline to cover basic expenses, but the burden of high-interest debt is now pushing them to the brink. PYMNTS Intelligence research reveals that 74.5% of US consumers carry at least some credit card debt, with the figure soaring to over 90% for those living paycheck to paycheck and struggling to pay bills.The average outstanding balance for these struggling households stands at 7,038, compared to 5,766 for those who live paycheck to paycheck without financial difficulties. For financially stable cardholders, the average balance drops to $3,202. This stark disparity highlights the widening gap between the economic haves and have-nots, with the bottom third of consumers effectively “tapped out,” according to Mark Zandi, head of Moody’s Analytics.The implications of this crisis extend far beyond individual households. Consumer spending, which accounts for nearly 70% of the U.S. economy, is under severe strain. As more Americans default on their credit card debt, financial institutions face mounting losses, which could ripple through the broader economy. The Federal Reserve’s recent data shows U.S. credit card debt continuing to climb, reaching $5.113 trillion in October 2024. Meanwhile, rejection rates for credit applications—including auto loans and mortgages — have risen sharply, particularly for consumers with low credit scores."
I'm just not sure that expansion of credit at such an exponential rate can be equated with expansion of wealth on the basis of debit this/credit that. To me it seems more like a doom loop of developing misery.
