Credit Card Defaults Soar: Is the U.S. Economy on the Brink?
Consumers buckle under inflation and interest rates as defaults hit their highest level in 14 years
Brace yourself, investorsU.S. credit card defaults are climbing at a rate we haven’t seen since 2010, signaling cracks in consumer financial stability. Credit card lenders have already written off $46 billion in delinquent loans in 2024, a 50% leap over last year, according to BankRegData. That’s a big red flag for the bottom third of U.S. consumers, whose savings rate is now a shocking zero, per Moody’s Analytics chief Mark Zandi. Meanwhile, Capital One (NYSE:COF) just revealed that its annualized credit card write-off rate hit 6.1% in November, up from 5.2% a year ago. Translation? Borrowers are struggling, and lenders are bracing for impact. . . .
But some banks are really just credit card companies (which, in the US are licensed as banks, but they don’t branches and ATMs and tellers and stuff.) The picture at such “small banks” looks pretty bad.
Worst ever? Worst in recorded hstory? Worst since . . .
Whatever it is, in a few weeks the media will figure out how to blame Trump or blame capitalism and this story will be reported too.
Have you ever heard those “debt relief” ads on the radio?
Here’s essentially how they work:
You sign up the debts you want to get addressed with the service.
They figure out a payment amount you start paying. (Usually less than the minimum payments on all those debts.)
THEY keep this money.
You start defaulting on the listed debts.
They step in and negotiate with the lenders, leveraging some of the money they have collected from you so far.
You may still owe something at the end, but it’s less than what you would have owed had you made the payments all along. And the resulting payments at the end are usually a continuation of the payments you made to the debt relief company.
Debt relief company keeps a big cut of the payments and negotiated final amounts.
So in the end you get a significantly lower overall debt without doing bankruptcy, but you end up with a trashed credit score. Might be worth it. Might not.
It’s something you could actually do on your own if you have the nerves and tenacity.
A lot of the money issued to deal with COVID, was used not for “needs” but as a down payment on “wants”. There will be a lot of toys being repossessed and that will be the first wave of our serious, economic downturn in the largest part due to our government that prints money, that then competes with those that earned it. There is a lot of our economic hardship that “we the people” will have to deal with, that never would have happened if not for the DC establishment corruption that lines their pockets with money they never “earned”.
According to the latest data available
in the past 12 months the (nominal) GDP grew $1,407b
But
$689b of that was gov’t spending
the Fed created $203b, and
inflation added $828b for a total $1,721b
That’s right, the people working for people and buying stuff from people part of the economy shrunk more than $300b. All the rest is just smoke and mirrors.
