CFPB announced debt is up, followed by rising delinquency; these are two metrics Mercator Advisory Group pointed out all year and something covered in greater detail in the 2018 Credit Outlook.
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During that same period, the delinquency rate (paying late or not at all) – which had fallen to historic lows following the financial crisis of 2007-2009 – has “modestly increased,” the CFPB analysis showed.
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“Even though the increase in delinquencies is slight, it is a troubling sign,” Bruce McClary, vice president of communications at the National Foundation for Credit Counseling, told NBC News.
Mercator Advisory Group anticipates that 2018 will bring more restricted lending as issuers sure up their portfolios in the face of rising rates. CFPB points out that average credit card debt rose 9% over the past two years which and a deepening of delinquency as interest rates begin to climb.
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The national average APR hit 16.21 percent last week, according to the latest report from creditcards.com. That’s the highest average APR the website has recorded since it began tracking rates in mid-2007. Credit card interest rates are expected to go even higher in 2018, as the Federal Reserve continues to boost interest rates.
2018 will be a pivotal year for credit cards. Stay tuned and expect to see more conservative strategies, with the industry focused on the balance sheet and credit risk.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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