Credit card charge-offs totaled $46B through Q3 2024—here’s what to expect in 2025

By the numbers: Credit card issuers wrote off $46 billion in seriously delinquent loans during the first nine months of 2024, a 50% jump from the same period in 2023, per BankRegData data reported by the Financial Times.

• Another $37 billion in consumer credit card debt was at least one month overdue.
• Overall outstanding credit card balances total $1.17 trillion as of Q3 2024, up 8.1% YoY, per the Federal Reserve.

Why this is happening: Many consumers are still on a shaky financial footing.

• Consumers are still spending—even though they no longer have pandemic-era savings to fall back on, per the San Francisco Federal Reserve.
• And sticky inflation has weighed on consumers. The consumer price index hit 2.7% in November, compared with 2.6% in October, per the Bureau of Labor Statistics.
• High interest rates have also made it harder for consumers to pay off their balances: The average credit card interest rate as of December 31 was 20.27%, per Bankrate. Consumers collectively paid $170 billion in interest during the 12 months ending in September, per BankRegData.

What’s next? The Fed’s rate cuts may bring down credit card interest rates in 2025, making it easier for consumers to pay off their balances. But APRs may not fall as much as consumers hope.

• The Fed indicated it will likely only cut rates two more times in 2025.
• And credit card interest rates will be slower to come down than the federal funds rate. Bankrate predicts the average APR will fall half a percentage point in 2025 if the Fed cuts rates by 75 basis points.

Our take: Overall, we expect charge-offs to continue to rise annually in Q4 because they’re a lagging indicator—giving a peek into Q4 credit card issuers’ results, Capital One’s credit card charge-off rate for November hit 6.1%, up from 5.2% in 2023.

But credit card delinquencies may start to decline or flatten out on a monthly basis. That would signal modest improvements later in 2025 after accounting for seasonal trends in Q1.

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