Debt

Credit Card Delinquencies Starting To Inch Up Again In The US

Credit card lenders got a break during the spring in terms of delinquencies, but they are beginning to inch higher again in the U.S.

According to a news report in The Wall Street Journal, Capital One, Synchrony and Alliance Data Systems have all seen the rate of delinquencies among credit card holders increase as a percentage of their overall loans during the last few months. The three companies, noted the Wall Street Journal, provide credit cards to consumers with less-than-stellar credit histories. Synchrony and Alliance Data are focused on the store-branded, private label credit card market.

The Wall Street Journal stated that Capital One is seeing loans that are more than 30 days delinquent increase to 4 percent of overall loans in August. In April, that rate was at 3.5 percent, noted the report. For Synchrony, the rate increased to 4.5 percent from 4.1 percent in the same time period and 5.3 percent from 4.7 percent for Alliance Data. The Wall Street Journal said the levels are among the highest the credit card market has seen in some years. For Alliance Data, the rate is at the highest since Feb. 2011.

Analysts have been bracing for increases in loan debt, but at a modest rate, which is a normal seasonal pattern. Consumers tend to acquire more debt around the holidays and slowly fall behind as the year marches on. However, the amount of loan debt is more than analysts expected, noted the report.

Richard Fairbank, chief executive of Capital One, said at a investor conference last week that it’s not unusual for credit card delinquencies to increase, even if there is a strong labor market. He said the increased delinquencies was due to the fact that debt is rising at a faster clip than incomes.

The executive noted Capital One started slowing its credit lending growth in 2016 after it surged in both 2014 and 2015.

——————————–

Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

TRENDING RIGHT NOW

To Top