Rising consumer debt levels and sustained credit growth have placed renewed attention on the importance of effective credit card collections strategies. Research from Mercator Advisory Group shows that revolving credit card balances continue to climb alongside broader consumer borrowing, while household debt obligations remain a significant component of personal finances. As lenders prepare for future economic uncertainty, strong portfolio management, early delinquency intervention, and well-developed collections operations are becoming increasingly important to maintaining credit quality and minimizing risk throughout the credit cycle.
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Data for today’s episode is provided by Mercator Advisory Group’s report – Credit Card Collections: The Foundation for Safe and Sound Card Portfolio Management.
6 critical credit stats for 2020:
- According to the Federal Reserve, consumer debt reached $4.15 trillion in 2019
- In Q3 of 2019, consumer debt was increasing at a 5% rate
- U.S. consumers devote 10% of their disposable income to non-mortgage debt: credit, auto, loans
- Revolving credit card debt is currently at $1.08 trillion
- By 2023, revolving credit card debt will expand by another $100 billion
- In 2019, revolving consumer debt increased 2.25% annually; non-revolving debt increased 6%
- Average credit card balances increased 8% from 2016 to 2019: from $5,247 to $5,645
About Report
Mercator Advisory Group released its latest research report, Credit Card Collections: The Foundation for Safe and Sound Card Portfolio Management. The report, the second in a series of three on collections, explains the importance of preparing collections operations for the next economic cycle, a downturn that is long overdue. It also gives an overview of the U.S. revolving debt market and defines strategies for each stage of credit card delinquency.
This report complements an earlier report on back-end collections, Credit Card Charge-Off Collections Takes Brains not Brawn. The pair give credit card managers a comprehensive view of credit card collections from cradle to grave. A forthcoming report in early 2020 will discuss underlying technologies that support this market space and will compare the vendors listed in this report.
“The U.S. market is long overdue for a recession. Unemployment levels are low, gasoline is cheap, inflation is at bay, but the indicators have been good for too long,” comments the author of the research report, Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group. “Experience shows that the best time to hone collections is when times are good. It is much better to test strategies when you don’t need to than have to react as the economy shifts.”
This document contains 17 pages and 10 exhibits.
Companies and other organizations mentioned in this research report include: ACI Worldwide, A.R.M Solutions, CGI, Equifax, Experian, edgeverve, FICO, Infosys, Lending Solutions, SkyCom, TransUnion
