The prevailing narrative says the consumer, squeezed by inflation, higher gas prices and a steady sense of uncertainty, is ready to pull back. Synchrony’s second-quarter results point in a more optimistic direction. People are still using their cards, and much of the growth is coming from how often they spend rather than from bigger individual purchases.
The results, reported Tuesday (July 21), put purchase volume at $49.8 billion, up 8% from $46.1 billion a year earlier. Average active accounts were roughly flat at 68.3 million, compared with 68.1 million a year ago. Co-branded cards did much of the work, accounting for $25.8 billion of purchase volume, a 23% increase.
Those figures describe a consumer that Brian Wenzel, executive vice president and chief financial officer at Synchrony, described in an interview with PYMNTS CEO Karen Webster as more durable than sentiment measures might suggest.
“There’s this perception given gas prices and inflation that the consumer is going to bend or come under a lot of duress,” Wenzel said. “Sales accelerated, even though gas prices are up, inflation was up, but [consumers] continue to spend,” and they continue to spend in discretionary categories, he added.
The company’s data support that view. Discretionary spending as a share of out-of-partner co-branded spend held relatively steady through the first half of the year across super-prime, prime and non-prime customers.
Asked whether that reflected broad consumer health or simply a shift in Synchrony’s portfolio toward prime and super-prime borrowers, Wenzel said mix plays a role, though not in the way conventional assumptions might suggest. “Our non-prime is down 130 basis points quarter on quarter. So yes, mix does help,” he said. “But when you look at that non-prime category, we still see resiliency.” The more noticeable softness, he noted, is among middle-prime consumers, who may be seeing less wage growth while facing affordability pressures.
On whether shoppers are buying more or simply paying more for a bigger basket, Wenzel said the answer came down to frequency rather than ticket size. Average transaction values were down on a reported basis because of portfolio mix, he said, and would have risen just under 2% excluding that effect. Transaction frequency, by contrast, was up roughly 6% to 9%.
“So, really, the consumers that we see are engaging and spending more on a frequent basis,” he said.
The strength was broad based across Synchrony’s businesses. Diversified & Value rose 12% to $17.2 billion, Digital increased 9% to $14.9 billion, Home & Auto advanced 6% to $12.1 billion, Lifestyle gained 6% to $1.5 billion and Health & Wellness increased 2% to $4.1 billion.
Credit Holds as Walmart Adds Volume
The growth in spending has not, so far, come at the expense of credit quality. The net charge-off rate was 5.43%, down from 5.70% a year earlier. The 30-plus-day delinquency rate stood at 4.16%, and 90-plus-day delinquencies were 2.01%. The allowance for credit losses eased to 10.09% of period-end loan receivables.
Wenzel credited underwriting changes made in 2023 and 2024, along with a shift in how customers pay. More have enrolled in autopay, he said, and Synchrony has used pre-collection outreach to contact higher-risk customers before their accounts move further into delinquency.
On the analyst call, Synchrony reported a 17% payment rate, roughly 70 basis points above the prior year and about 170 basis points above the 2015 to 2019 pre-pandemic average. The company attributed the difference largely to new portfolios, product-mix shifts and prior credit actions.
The rising payment rate cuts both ways. It signals a healthy consumer, but a faster pace of repayment is not necessarily good for the balance sheet. More than half of the recent increase came from new programs including Walmart and Lowe’s, Wenzel said, with lower promotional balances adding to it. Together, those effects accounted for about 85% of the payment rate increase.
Walmart’s OnePay relationship is also beginning to shape Synchrony’s transaction mix. Wenzel described it as a three-party relationship among Synchrony, OnePay and Walmart, with early adoption concentrated among Walmart+ customers. “The value proposition really resonates with the Walmart+ customer. So we see high engagement with those,” he said. “And those folks are buying more than groceries.”
A Measured Take on AI
Synchrony is also exploring where artificial intelligence can improve distribution and productivity, though Wenzel was more measured than much of the rhetoric surrounding the technology. He sees opportunities in commerce and internal productivity, he said, but noted that “the curve of delivering that productivity is slower than people thought.” He also pointed to token, credit and licensing costs as something to watch as providers seek returns on heavy AI investment.
Looking ahead, Synchrony’s earnings call commentary and investor materials indicate the company expects strong purchase-volume growth to continue through 2026, receivables growth to accelerate in the second half, and the full-year net charge-off rate to hold in a range of 5.5% to 6%, and perhaps below that level.
For now, Wenzel said, Synchrony is not seeing the pullback that might be expected from consumers worried about employment or household finances. “We don’t see that fear in folks,” he said, adding that “they’re continuing to spend and [are] confident.”
