Credit Card Charge-Offs and Delinquencies Reach 13-Year High: A Concerning Trend
Credit card charge-offs and credit card loan delinquencies have reached a 13-year high, according to the Federal Reserve’s third-quarter report. The data shows that credit card charge-offs increased to 4.65%, the highest level since the third quarter of 2011, and credit card loan delinquencies held steady at 3.11%, reaching a 13-year high.
The rapid increase in charge-offs, which is expected to continue through 2025, is a cause for concern. Delinquencies, which often precede charge-offs by six to nine months, indicate a potential peak in credit card defaults. Wilbert van der Klaauw, an economic research advisor at the New York Fed, warned that the trend may signal increased financial stress among younger and lower-income households.
The data suggests that credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels. This could lead to a cycle of debt and financial stress for many individuals. As credit card defaults continue to rise, it is essential to monitor the situation closely to identify potential trends and develop strategies to mitigate the impact on individuals and the economy as a whole.
