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U.S. Credit Card Delinquency Rates Inch Higher

Credit card delinquencies increased for three consecutive months, adding to signs that consumers in the U.S. are having a tough time paying their debt.

According to a news report in Reuters, credit card data from the likes of JPMorgan and Discover Financial Services on Monday (Oct. 16) show that the number of delinquencies is on the rise. Take JPMorgan, for starters. Reuters reported that delinquencies increased 1.22 percent during the month of September. Meanwhile, Discover saw credit card delinquencies increase by 1.64 percent from August. At Bank of America, the rise was 1.56 percent, marking the second time it increased at BoA in the past three months.

The reason for the uptick in the number of people who can’t pay their credit card bills is due to lenders going after consumers with less-than-stellar credit ratings. Although this practice is intended to fuel growth in a low-interest rate environment, the lower credit quality is coming back to bite them.

“Delinquency rates have risen in part because lending to sub-prime borrowers increased significantly in recent years,”’s senior industry analyst, Matt Schulz, said in the report. “That brings with it a lot of risks, for both the banks and the consumer.”

The rates of delinquencies still remain below the levels during the financial crisis of 2008 and 2009, but any uptick means there will be higher loan losses for the financial companies, noted Reuters. Earlier in the month, JPMorgan said provisions for credit losses increased by 14 percent during the third quarter, while rival Citigroup saw a 15 percent uptick in credit losses, noted the report.

In September, The Wall Street Journal reported that 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. As noted in the report, the three companies 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.


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