PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

National Credit Card Collection Manager Day

Brian Riley by Brian Riley
June 30, 2021
in Analysts Coverage, Banking, Credit, Debt, Fraud Risk and Analytics
0
National Credit Card Collection Manager Day

National Credit Card Collection Manager Day

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

The often thankless job of a collection manager deserves note today, with 184 days remaining in 2021. Sure, collections do not have the panache of credit card acquisitions or the high-tech feel of innovating the latest technologies behind the scenes. The collection people execute risk management policies.

And, today, as in many markets worldwide, what is in the collection working queues represents the entire risk for the calendar year 2021. Therefore, the 185 days past due collection requirement remains applicable, and any credit card delinquency that cycles in tomorrow is 2022 credit risk.

Forget about the financial crisis for a moment and consider what is on your plate. 

The latest numbers published by the Federal Reserve indicate that credit card delinquency for 1Q2021 was a meager 1.99%. Here you can see that the metric is at the lowest level since at least 1Q1991.  Write that one down as you start forecasting your 2021 bonus.  The peak for delinquency during those 30 years was 6.77% delinquency 2Q2009.  Remember how that went.  If you were running or working in a call center, you would remember that the 6.77% turned into loss rates north of 10%.

Not today. With the current credit card charge-off rate at 2.88%, I’d bet the 2021 final rate will be closer to 2% than it is to 3%.  With the 4Q2020 final credit card charge off rate sitting at 2.67%, expect an improvement YoY of about 30bp.

That 30bp improvement is likely to make a collection line manager smile as they prepare for their MBO review.  But, for now, enjoy the limelight.  2022 will not be a piece of cake, and by the time 2023 rolls around, your collection operation will contend with the ugly issues of inflation and increased interest rates.

In the interim, expect your boss to be even happier than you.  As CNBC reports, “the Federal Reserve gives U.S, banks a thumbs-up as 23 lenders Easily Pass 2021 Stress-Tests” with the most recent stress testing results.

  • The central bank said that the scenario included a “severe global recession” that hits commercial real estate and corporate debt holders and peaks at 10.8% unemployment and a 55% drop in the stock market.
  • While the industry would post $474 billion in losses, loss-cushioning capital would still be more than double the minimum required levels, the Fed said.
  • The Fed, in releasing the results of its annual stress test, said all 23 institutions in the 2021 exam remained “well above” minimum required capital levels during a hypothetical economic downturn. Bank shares popped after the release; the KBW Bank Index rose 1.5% at 5 p.m.

This means credit card issuers can release some loan loss reserve money to smooth out the suppressed revenue numbers caused by reduced revolving debt. As a result, interest income this quarter will be weak, and these funds can help.

So, June 30, which is also the anniversary of the day Gone With the Wind, was published. In addition, Albert Einstein published his theory of relativity (“Zur Elektrodynamik bewegter Körper”), add another important milestone to your calendar: National Credit Card Collection Day.

Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Tags: BanksCollectionsCredit CardDebtDelinquencyRisk Management
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

    Must Reads

    live shopping, ebay

    Q&A: eBay Exec on Live Shopping and the Future of Payments

    March 24, 2023
    AI and Biometrics in Regulatory Compliance in Finance

    The Importance of AI and Biometrics in Regulatory Compliance in Finance

    March 23, 2023
    Everyone Benefits from the Real-Time Payment Networks  

    Everyone Benefits from the Real-Time Payment Networks  

    March 22, 2023
    commercial payments

    Optimizing Commercial Payments in the Digital Age

    March 21, 2023
    cross-border payments

    Cross-Border Payments: Fighting
    E-Commerce Fraud Using Data

    March 20, 2023
    fraud, ChatGPT-4

    How to Fight Fraud While Still Enabling a Great Online Customer Experience

    March 17, 2023
    RTP

    Financial Institutions Without an RTP Strategy Risk Being Left Behind

    March 16, 2023
    visa chargeback

    New Visa Chargeback Guidelines Will Be a Game Changer

    March 15, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download the Payoneer eBook: