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Credit card and car loan defaults hit 10-year high
Posted on 9/6/23 at 7:59 pm
Posted on 9/6/23 at 7:59 pm
quote:
Inflation-squeezed Americans are defaulting on their credit cards and auto loans at levels not seen since the financial crisis – and the struggle to pay their bills is poised to get worse as interest rates rise and the moratorium on student loans expires.
Low- and middle-income earners have been especially hit hard by soaring prices on everything from rent, groceries, and new and used cars despite the Federal Reserve’s attempts to tamp down stubbornly-high inflation.
This year, credit card delinquencies have hit 3.8%, while 3.6% have defaulted on their car loans, according to credit agency Equifax.
Both figures are the highest in more than 10 years.
“The increase in delinquencies and defaults is symptomatic of the tough decisions that these households are having to make right now — whether to pay their credit card bills, their rent or buy groceries,” Mark Zandi, chief economist at Moody’s Analytics, told the Washington Post.
With any savings from pandemic-era government stimulus checks dried up, many stretched borrowers have turned to opening new lines of credit — even as the average interest rate hit a record 20.6%, according to Bankrate.com — to try to pay off their debts.
There are 70 million more credit card accounts open now than before the pandemic in 2019 and credit card debt surpassed $1 trillion for the first time ever, this year according to the New York Federal Reserve.
“We’ve sped way past normal,” Mike Brisson, a senior economist at Moody’s Analytics said in a webcast, who referred to the growing delinquencies as “very concerning,” according to the Washington Post report.
The interest rates on credit cards could soar even higher as the Fed mulls another rate hike at the end of the month to bring inflation down to its target rate of 2% — from its current 3.5%.
Vulnerable individuals already squeezed by high rents and grocery prices will also need to start making student loan payments next month after their debts were paused for more than three years.
The pain felt by consumers could be a positive sign for Fed policymakers as they seek to thread the needle to avoid a recession with their much-ballyhooed “soft landing,” according to financial experts.
“The Fed might look at this and say this is the whole purpose of raising rates, to make it more difficult” to make purchases, Torsten Slok, chief economist at Apollo Global Management, told the Washington Post.
However, with the holiday season approaching, industry experts are also concerned that consumers will rack up even more debt on top of their rising energy bills, particularly as the cold weather kicks in and the cost of heating homes ratchets up.
LINK
Posted on 9/6/23 at 8:01 pm to stout
Student Loan Payments kick in for some in a week.
Posted on 9/6/23 at 8:01 pm to 50_Tiger
And gas prices keep climbing
Posted on 9/6/23 at 8:02 pm to stout
Inflation is hurting middle class and poor
Posted on 9/6/23 at 8:02 pm to stout
quote:
And gas prices keep climbing
This post was edited on 9/6/23 at 8:04 pm
Posted on 9/6/23 at 8:03 pm to stout
Great job Democrats!!!
Arseholes.
Arseholes.
This post was edited on 9/6/23 at 8:04 pm
Posted on 9/6/23 at 8:03 pm to stout
Poor federal fiscal and monetary policies have consequences
Posted on 9/6/23 at 8:04 pm to stout
quote:
With any savings from pandemic-era government stimulus checks dried up,
Savings? You’re talking about savings??!! SAVINGS??!!
Posted on 9/6/23 at 8:05 pm to stout
$60,000 millionaires can’t keep up
Posted on 9/6/23 at 8:08 pm to stout
quote:
This year, credit card delinquencies have hit 3.8%, while 3.6% have defaulted on their car loans, according to credit agency Equifax.
Perspective, what is a normal rate?
Less than 1 or less than 3.5?
Posted on 9/6/23 at 8:25 pm to stout
Does anyone here know a place where a baw can refi a truck loan to 144 months?
Posted on 9/6/23 at 8:27 pm to stout
There’s one cause of this.
People want to live above their means.
People want to live above their means.
Posted on 9/6/23 at 8:27 pm to 50_Tiger
quote:
Student Loan Payments kick in for some in a week.
This is going to absolutely crush some people
Posted on 9/6/23 at 8:58 pm to fightin tigers
quote:
Perspective, what is a normal rate? Less than 1 or less than 3.5?
It hasn’t been this high since 2013, but prior to that, it was basically never this low.
Posted on 9/6/23 at 9:12 pm to slackster
quote:
It hasn’t been this high since 2013, but prior to that, it was basically never this low.
Sooooooo… the sky isn’t falling?
Wonder if that major dip was brought on because of the stimmy checks and people not having to pay rent/student loan payments
Posted on 9/6/23 at 9:15 pm to KI5NKM
Unfortunately I fear this is just the start
Posted on 9/6/23 at 9:15 pm to stout
And I’m still paying for people’s bags of fudge rounds.
Posted on 9/6/23 at 9:17 pm to TIGRLEE
quote:
There’s one cause of this.
People want to live above their means.
Their means just a few years ago went further than it does now that just about every consumable good has seemed to double in price
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