SPY +0.66%
BND +0.29%
QQQ +1.17%
DIA +0.65%
VNQ +0.25%
GLD +0.99%
BTC +3.25%
AAPL -1.52%
GOOGL +0.50%
NVDA +2.25%
MSFT +0.56%
META +3.77%
AMZN +1.29%
TSLA -1.15%
UBER -0.98%
GS +3.25%
BAC +0.13%
JPM +0.69%
BRK.A +0.11%
COST -1.32%
XOM -0.62%
BABA +1.17%
WMT +1.00%
SPCX +5.10%
DIS -2.64%
F +3.17%
Live a richer life.
  • Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Home
Credit Cards
A man makes a purchase at a coffee shop. Patrick T. Fallon/Getty Images

Americans are defaulting on their credit cards at record levels, says new report — here’s why that could mean more pain in 2025 and how to protect yourself now

Advertisement

And, according to data gathered by BankRegData and reported in a Financial Times article, $46 billion worth of credit card debt were considered write-offs by lenders in the first nine months of 2024.

Our free newsletter helps you make every swipe count.

By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.

A creditor considers a debt a write-off when the borrower has defaulted on the loan, and is most likely unable or unwilling to pay back what’s owed.

According to the same Financial Times article, this amount of credit card defaults is at its highest level since the recession that began in 2008.

What does this mean for credit card debt levels in 2025, and how does it affect your finances?

What this means for credit card balances in 2025

We may see more people stretched thin financially in 2025, leading many to continue relying on credit card debt and finding it hard to pay off that debt.

Although inflation has cooled somewhat in the past several years, it still remains higher than the Federal Reserve’s goal of 2%. Even if inflation continues to go down, overall costs remain higher than what many families can afford.

According to data from the U.S. Bureau of Labor Statistics (BLS) 2023 Consumer Expenditure Survey, the average household spent $77,280 on various necessary expenses (food, housing and transportation), which was up 5.9% from the previous year. When you consider the median income is $60,580 according to recent BLS data, it’s clear that middle-class households are, to say the least, stretched.

Data from the Federal Reserve also shows that credit card balances climbed to $1.17 trillion in Q3 2024, up $24 billion from the second quarter.

What’s more, there have been rising rates of rejections for loan applications, including credit cards. An October 2024 Credit Access Survey by the Federal Reserve Bank of New York revealed that the rate of credit card applications increased by 28.6% in 2024, with a rejection rate of 22.2%.

While none of this directly spells trouble, these statistics may point to the financial pressures many Americans face. Unfortunately, even one late payment could set you further behind, with added late payment fees and interest charges.

Advertisement

Must Read

How you can protect yourself

Even though you may be in a good spot financially now, it doesn’t hurt to protect yourself in case you won’t be later on.

First, take a look at your budget and review your credit card transactions. See if there are any areas where you can cut back or eliminate. For example, if you have some subscription services you no longer need, taking a few minutes to cancel them may save you hundreds of dollars over the year.

Paying more than the minimum balance due on your credit cards will also help, especially as it means you could pay less in interest overall. As you pay your balance down, be mindful of additional purchases, so you can lower the amount you owe each month.

Debt consolidation is also a common way for many people to lower their monthly payments. It’s where you take out a loan and use the proceeds to pay off your credit card balances, with the loan ideally being at a lower interest rate.

Conducting credit balance transfers to a card that has a lower APR (and may also offer a 0% introductory rate) could mean a lower monthly payment. Before doing so, see if there is a fee for doing a transfer and whether it’s worth it. Take the time to read the fine print so that you know how long you have to pay off the balance before the regular rate kicks in.

If you’ve slashed your budget and find that you want some more breathing room, increasing your income may be the way to go. Asking for a raise, switching jobs for a higher salary or even taking on side gigs are all feasible ways you can earn more.

You May Also Like

Share this:
Sarah Li-Cain, AFC Contributor

Sarah Li-Cain, AFC is a finance and small business writer with over a decade of experience.

more from Sarah Li-Cain, AFC
Two sisters taking a walk together.

Loans • Nov 09

My sister freelances and often comes to me to borrow cash for rent when she’s between jobs. Is it time to cut her off?

Use the months before you retire to plan your long-term strategy.

Retirement • Nov 07

I've handed in my retirement notice and now reality is hitting me. How do I prepare for the rest of my life financially?

Explore the latest

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither investment, tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities, enter into any loan, mortgage or insurance agreements or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter. Advertisers are not responsible for the content of this site, including any editorials or reviews that may appear on this site. For complete and current information on any advertiser product, please visit their website.

†Terms and Conditions apply.