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Daily Missive

Credit Card Default Wave Hits U.S. Banks

Loading ...Lau Vegys

January 14, 2025 • 3 minute, 19 second read


credit card debt

Credit Card Default Wave Hits U.S. Banks

As I’ve said many times in these pages, the U.S. government isn’t the only one drowning in a sea of debt—Americans are too. And nowhere is this more evident than with credit card debt.

Recent data from the latest consumer debt report by the Federal Reserve Bank of New York shows that credit card balances hit $1.17 trillion in the third quarter of 2024.

This is the highest balance on record since 1947. As you can see in the graph below, credit card debt surged during the pandemic and has continued climbing ever since—all under the watchful eyes of Biden and Powell.

As one reader once pointed out somewhere in the comments section, card balances aren’t that important if we pay them off at the end of each month—and what we should really be watching are delinquencies.

While that might be the case (with a few caveats), I’ve got some bad news for you. New data is in… And as it turns out, defaults on U.S. credit card loans hit the highest level in 14 years last year. You can see this spike in the chart below.

According to BankRegData, credit card lenders wrote off $46 billion in delinquent loan balances in the first nine months of 2024. Again, this is the highest amount since around the time the global financial crisis wreaked havoc on economies worldwide. It’s also a 50% increase from the year prior.

This puts the final nail in the coffin of the “strong economy” narrative that President Biden’s handlers and Fed Chair Jerome Powell have been pushing. It’s anything but strong…

After years of Fed’s money printing and inflation, the American consumer’s finances are in worse shape than they’ve been in decades. And now, that reality is catching up with them in a major way.

Too Many Canaries in the Coal Mine

Banks haven’t reported their fourth-quarter numbers yet, but early signs show more and more people are falling behind on their debts. Capital One, the third-largest U.S. credit card lender, said its write-off rate hit 6.1% in November, up from 5.2% last year.

Other major banks like Citibank, JP Morgan Chase, and Bank of America are all reporting massive spikes in delinquencies.

This is bad news for the consumer, but it’s also a big problem for the banks.

Keep in mind, all of this comes at a time when banks are sitting on hundreds of billions in unrealized losses, facing commercial real estate problems, and watching their credit ratings get downgraded left and right (while their shares hover near multi-year lows).

These are all the reasons why the smart money has been fleeing U.S. banks. As I wrote before, Warren Buffett’s Berkshire Hathaway has been systematically pulling out of major banks since early 2020. They’ve completely divested their stakes in Wells Fargo, U.S. Bancorp, JPMorgan Chase, and Goldman Sachs, while drastically reducing their position in Bank of America. And Buffett isn’t alone—Ray Dalio’s Bridgewater Associates and other major investors have been dumping bank stocks en masse.

The upshot is, the banking sector was already buckling under multiple pressures. I’m not saying card defaults will be the final straw, but they’re certainly piling weight onto a camel that’s already struggling to stand.

One last thing…

I’ve recently spoken with a senior banker who has been in the financial industry longer than the Great Financial Crisis. His take is that the surge in credit card defaults isn’t happening in isolation—it’s part of a broader pattern of distress. The American consumer is simply tapped out. That’s why banks are seeing increases in defaults across all types of consumer debt, from auto loans to mortgages to personal loans. This isn’t about financial schemes or out-of-control risk-taking like we saw in 2008—it’s about the brutal reality that American households are struggling to survive.

And that’s what, according to him, makes this situation potentially even more dangerous than the 2007-2008 crisis was.

Regards,

Lau Vegys


A $14 Trillion Wall Street Firm Just Changed Everything for Ethereum

July 18, 2025 • Ian King

Some analysts have attributed this rally to renewed optimism around crypto ETFs or broader market momentum.

Others pointed to Ethereum’s surging activity across Layer‑2 networks, which act like express lanes built on top of Ethereum to make transactions faster and cheaper.

But I believe something else played a much bigger role in this week’s ETH rally.

And it came from Fidelity.

The 78-year-old financial giant, which manages over $14 trillion in assets, just published a report that backs up exactly what I said back in 2022.

According to Fidelity, Ethereum isn’t a tech investment.

It’s a sovereign digital economy.

A $14 Trillion Wall Street Firm Just Changed Everything for Ethereum
The Hidden Crack In the Labor Market

July 18, 2025 • Andrew Packer

The 8.87 million Americans holding second jobs likely fall into two groups. The first are those who work a second job by choice – the so-called “side gig.”

The second group? Those who are struggling economically.

The Hidden Crack In the Labor Market
How to Ruin a Business Without Really Trying

July 18, 2025 • Andrew Packer

It’s crucial as an investor to look at who you’re investing with. Someone with a good idea and integrity will help you grow your wealth far more than someone with a great idea but who has no integrity.

And why it’s important to keep some of your wealth in honest forms of money like gold and, yes, bitcoin.

And there’s another theme here as well: The truth. It always comes out. Not always on the jumbotron, or on the front page of a national newspaper. But if you always live your life under the assumption that anything you do will be headline news – or the darling of social media – you’ll focus on the positive ways that can turn out.

How to Ruin a Business Without Really Trying
A Week of Marvels

July 17, 2025 • Bill Bonner

First the marvels. We had thought the trade wars were happily resting in their graves. But last week, they rose up again…ghoulish and ghastly.

After the ‘reciprocal’ tariff program was abandoned, the administration’s top quack economist, Peter Navarro, had promised ‘90 deals in 90 days.’ And so, the trade negotiators went to work. But after three months, there were only three deals done. One of them was with the UK, with which we had a trade surplus…and the other two — with China and Vietnam — are fishy and probably won’t stick.

A Week of Marvels