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

With 2023 Days Away, Credit Card Delinquencies Bubble

Brian Riley by Brian Riley
December 2, 2022
in Analysts Coverage, Credit
0
Credit Cards: Where the Money Is (and Is Not) - PaymentsJournal

Credit Cards: Were the Money Is (and Is Not)

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

With less than a month left in 2022, credit card issuers can revel in low delinquency rates. But watch out for next year. As our recent Credit Outlook projected, 2023 will not be a year of record low rates. The experience will be a higher risk.

S&P Global summarizes the market, drawing information from Asset Backed securitizations.

  • Credit card delinquencies and charge-offs rose for all six major U.S. card issuers in October. Bank executives said such a trend is expected. Credit is normalizing after stimulus aids wane and people come out of pandemic lockdowns.

Back to Normal Means Record Low Delinquency is Just History

  • All six major card issuers tracked by S&P Global Market Intelligence posted higher charge-off rates in October. This was both sequentially and year over year.
  • American Express Co., Bank of America Corp., Capital One Financial Corp., Citigroup Inc., Discover Financial Services and JPMorgan, Chase & Co. posted an average credit card annualized net loss rate of 1.15% in October. This was up from 1.04% in September and 0.90% in October 2021. However, the October figure was about half of the 2.32% recorded in February 2020, just before the COVID-19 pandemic was declared March 12, 2020.
  • Capital One posted the biggest year-over-year increase, of 48 basis points, in charge-off rates in October, followed by Citigroup with 32 basis points. American Express had the slightest year-over-year increase of 11 basis points.
  • Credit card delinquencies continued to rise across the board in October, with Capital One also posting the biggest month-over-month and year-over-year increases. The average 30-plus-days delinquency rate for the top card issuers was 0.92%, up 12 basis points year over year.

Good News and Bad News for Credit Card Issuers

Credit card issuers can still revel in fact to 2022; delinquencies are low. For the first six months of 2023, the charge-off risk will be based on the aging of credit cardholders that entered the collection queues between July and December of 2022. They must keep an eye on the segments as they flow from one delinquency stage to another. If they can control the aging, the mid-year risk will be limited, but do not forget that customers in these later stages of the collection cycle now face 8% inflation and potentially punitive credit card interest rates because of their delinquency status.

But the collection manager will have to also deal with higher delinquency flows in the early aging buckets during 2023 because that will be where the true risk will be found later in the year.

After all, credit card delinquency is all about the consumer’s household budget.  With a cold winter ahead, heating costs will further upset the apple cart.

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

Tags: CreditCredit Card IssuerCredit CardsDelinquency
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

    digital payments

    Navigating the Future: Top Digital Payment Trends to Watch

    March 31, 2023
    scams

    As Scams Become Omnipresent, New Tools Can Help FIs Fight Back

    March 30, 2023
    item clearing

    As Check Volumes Decrease, Financial Institutions Need to Consider Alternative Clearing Options

    March 29, 2023
    payments friction

    Too Much Payments Friction Can Lead to Customer Chafing

    March 28, 2023
    online fraud

    Understanding the Cost of Online Fraud and How to Prevent It

    March 27, 2023
    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

    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