Economic Strains Push Loan Defaults to 10-Year Peak

After years of unusually low defaults, credit union delinquencies surged in 2024 to their highest levels in over a decade. An S&P Global analysis showed loans 60+ days delinquent hit 0.97% of total loans by year-end 2024, up from 0.83% a year prior and the worst since 2013.

Net charge-offs jumped as well – reaching 0.80% of average loans (a 13-year high) versus 0.61% in 2023. The primary culprits were credit cards and auto loans, which saw the sharpest deteriorationty. “We experienced anemic loan performance along with rising default rates.

Credit card and auto loan delinquencies remain especially elevated,” NCUA Chairman Todd Harper noted, urging credit unions to “carefully manage their credit risks” amid growing member financial stress.

Indeed, 2024’s mixed economic signals – high inflation early in the year, rising interest costs, and the resumption of student loan payments – left more members struggling to meet obligations. Collections managers observed upticks in past-dues across product lines. In response, many credit unions bolstered their loan loss reserves and refreshed their collections playbooks, emphasizing early member contact and hardship workouts. Some even reinstated pandemic-style relief options on a case-by-case basis to prevent charge-offs.

Takeaway: The long post-COVID honeymoon is over; 2024 marked a turning point where delinquencies normalized to – and now above – pre-pandemic levels. For collections teams, that means busier queues but also an opportunity to shine with proactive risk management and member-centric recovery strategies.