Volume 26, Issue 4
WisconsinChristianNews.com
Page 37
The Alarming Collapse Of U.S. Household Finances
By Michael Snyder August 2025
opened up, consumers depleted those savings. This has also reignited delinquencies. 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 par- ticular, small banks have been getting absolutely hammered by
$150,000 annually have jumped almost 20% over the last two years, faster than for middle- and lower-income borrowers, ac- cording to the credit-scoring firm VantageScore. A recent Federal Reserve Bank of St. Louis study found the share of people mak- ing late card payments in the highest-income zip codes has risen twice as much over the last year as in the lowest-income ones. 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 fi- nancial poison. Unfortunately, today the average U.S. household is carrying more than $6,000 in credit card debt. Total U.S. household credit card debt is currently at $1.18 trillion, making up 6% of all household debt. Wash- ington, 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? In the second quarter of 2025 it was 21.16%. If you are paying more than 20 percent interest on a credit card balance, you are getting absolutely killed finan- cially. And “buy now, pay later” plans can be even worse. A recently release LifeStance Health survey reveals “stressfla- tion” 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 sig- nificant mental health impacts. 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.
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 en- vironment, and turning to credit cards for some relief can be ex- tremely 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 Amer- icans. 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.” 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
very high delinquency rates. Our seemingly endless cost of living crisis is putting a tremen- dous 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 vul- nerability in the US economy as the labor market slows. Delinquencies on such debts from those making at least
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