US Credit Card Defaults Surge as Cost of Living Squeeze Hits Households

The number of Americans behind on credit card repayments has reached its highest point in 15 years as households across the United States struggle under the weight of rising costs. Data from the Federal Reserve Bank of New York indicate that 12.4 percent of credit card loan balances are now more than 90 days in arrears—the highest level seen since 2011. The total volume of American credit card debt has risen by 76 percent since the beginning of 2011, surging to a record 1.23 trillion dollars.

These figures underscore the mounting difficulties faced by lower-income families, who are increasingly unable to manage the burden imposed by higher prices for essential goods and services. Kenneth Mohammed of the American Consumer Credit Counseling group described the situation as a “household expenses crisis,” with escalating complaints from across the country regarding the price of food, vehicles, utilities, and basic necessities.

With consumer sentiment deteriorating sharply in November, the University of Michigan survey recorded the lowest levels of personal finance confidence since 2009. Andrew Hollenhorst, chief US economist at Citi, commented that these high delinquency rates reflect the challenges faced by a substantial segment of the population. Credit card debt, carrying the steepest interest rates of all consumer debt, quickly becomes unmanageable for those struggling to pay, compounding financial strains on vulnerable households.

President Trump, who was elected on the promise of reducing prices, has attempted to address the crisis with policy reversals, including tariff exemptions on more than 200 food imports such as beef, coffee, and bananas in the hope of easing grocery bills. He has also pledged to distribute two thousand dollar cheques to low and middle income citizens, funded by tariff revenues.

Despite these interventions, labour market indicators remain concerning. Job growth has stalled and the unemployment rate has climbed to 4.4 percent, up from 4.1 percent in the previous year. Christopher Waller, a Federal Reserve governor, has cautioned that lower-income Americans are increasingly falling behind on mortgage and car loan payments. He warned that if employment conditions weaken further, matters will likely become “more acute.”

Justin Begley, economist at Moody’s Analytics, warned of a possible domino effect in the event of a significant labour market downturn. Should workers lose their jobs in large numbers, missed loan repayments could set off wider distress across other forms of household debt. For now, economists are closely monitoring credit and employment data for the signs of any broader instability in the US economy.