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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.
With a delinquency rate of 2.58%, credit card delinquency hit a 7 year high in Q1 2019
- Delinquency primarily arose from cardholders aged 18-29 — generations Y & Z, also known as millennials
- The dual challenges of learning household budgeting combined with student debt seems to be the culprit
- Almost 1.6 million Americans resorted to bankruptcy during the economic crisis
- Since then, bankruptcies have fallen by half but are forecasted for modest growth to 2022
- At the peak of the recession, $10 of every $100 in card portfolios was charged off
- Charge off rates hit a 10 year low in 2015 at 2.92%, but have risen to 3.74% recently
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