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U.S. credit card defaults have surged to their highest levels since 2010, with lenders writing off 50% more in unpaid loans in the first three quarters of this year compared to the same period last year. This increase is largely attributed to prolonged high inflation and elevated borrowing costs, which have strained consumers' ability to manage debt.
Financial experts express concern that potential tariff implementations could exacerbate these challenges, leading to further increases in borrowing costs in 2025. Investors should be mindful of the broader economic implications, as rising consumer debt defaults may impact financial institutions and overall market stability. Diversifying investment portfolios to include assets less correlated with consumer credit, such as precious metals, could offer a hedge against potential downturns.
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**Tip Of The Day**
In light of increasing consumer debt defaults, consider evaluating the exposure of your investment portfolio to financial institutions and explore opportunities in sectors that are less sensitive to consumer credit risks.
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