Credit card debt is at an all-time high, and major banks are feeling the pain.
JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup are all reporting major losses from bad loans. These four giants lost a combined $6.9 billion in the third quarter of this year, mostly due to people defaulting on their credit cards and other loans.
JPMorgan’s losses were the highest, reaching $2.087 billion, a 40% increase from the same period last year. Wells Fargo wasn’t far behind, with losses of $1.111 billion, a 54% jump. Citigroup saw losses of $2.172 billion, a 32% increase, and Bank of America reported losses of $1.534 billion, a whopping 64% increase.
This bad news comes as credit card interest rates hit a record high. Rates have jumped by 7 percentage points in just two years, reaching 23.4% a few months ago. That means people are paying a lot more in interest on their credit card debt.
And the total amount of credit card debt is also at an all-time high, reaching $1.36 trillion. That’s a lot of money! Americans are now paying $318 billion in annual interest on their credit card debt, more than double what they were paying in 2019.
One analyst is warning that the credit card debt bubble is about to burst. He says that credit card delinquency rates are at their highest level since 2011, meaning more people are struggling to pay their bills.
This could be bad news for the economy.
If people start defaulting on their loans in large numbers, it could lead to a financial crisis. So, it’s something to keep an eye on. /p>
