Consumer Finance

Experian: Bank Card Default Rates Rise 3.48 Pct In Feb

New data has revealed that bank card default rates rose six basis points to 3.48 percent.

S&P Dow Jones Indices and Experian just released data through February 2019 for the S&P/Experian Consumer Credit Default Indices, which found changes in consumer credit defaults. The information showed that the composite rate rose two basis point from last month to 0.92 percent, marking its fifth-straight month of increase.

After seven-straight months of decline, bank card default rates have now increased for three consecutive months — a primary contributing factor to the increase in the composite default rate.

“This month’s data show[s] that four of the five cities tracked, as well as all consumer credit default categories, were higher in February,” said David M. Blitzer, managing director and chairman of the index committee for S&P Dow Jones Indices, in a press release. “This is more of a seasonal shift than a sign of rising default rates. Over the last several years, December, January and February have all experienced increases in default rates across cities and loan categories. Further, none of the figures suffered large increases, compared to their levels of one year ago. Retail sales saw strong gains in January, and auto sales continued at an annual rate of about 16.5 million vehicles. Any upward pressure on mortgage defaults stemming from the rise in home prices over the last few years is being offset by weakened sales of new and existing homes.”

“The overall economy is not expected to put any pressure on consumers’ financial condition[s],” he added. “Employment and job growth continue to be quite strong, and wages have recently seen some gains. The economy is settling into a stable growth path, with anticipated GDP gains of 2 percent to 2.5 percent by most analysts in 2019. Two perennial sources of anxiety for economists and consumers are inflation and the unemployment rate. Inflation remains around 2 percent, and the unemployment rate is at or below 4 percent in recent data. As long as these figures remain steady, the Fed isn’t likely to shift interest rates, and consumers should not have difficulty paying their bills, which could keep default rates close to current levels.”

In addition, the data showed that the auto loan default rate remained unchanged at 0.99 percent, while the first mortgage default rate was one basis point higher at 0.70 percent.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.