Consumer Payment Card News

Consumer Credit Card Delinquency Slowly Rears Its Ugly Head

Consumer credit card delinquency, those whose account(s) have fallen more than 30 days late or past the due date, has been slowing creeping up in 2018, despite the solid American economy. Among the nation’s largest credit card issuers, preparations are underway to set aside more funds to cover future losses in a potential recession in 2020.

Credit Card Delinquency Grows

U.S. Credit Card Delinquency Rate

The 30+ day delinquency rate, seasonally adjusted (SA), among the top 100 U.S. banks for the third quarter (3Q/18) increased one basis points (bps) sequentially, but down three bps year-on-year (YOY).

On a not seasonally adjusted basis (NSA), the delinquency rate among the top 100 U.S. banks for 3Q/18, jumped 19 bps from the prior quarter and up three bps YOY.

Compared to two years ago, the SA delinquency ratio is up 20 bps, and the NSA delinquency ratio is up 18 bps.

According to the Federal Reserve, the top 100 U.S. banks posted a 30+ day SA delinquency rate of 2.49% for 3Q/18, compared to 2.48% in 2Q/18, and 2.52% for 3Q/17.

On a NSA basis the top 100 U.S. banks posted a 30+ day delinquency rate of 2.48% for 3Q/18, compared to 2.29% in 2Q/18, and 2.52% for 3Q/17.

Early stage delinquency (30+ days) for the fourth quarter (4Q/18), among the nation’s Top 4 issuers, increased 13 basis points (bps) sequentially, and edged up year-on-year (YOY) by 16 bps.

Top 4 U.S. Credit Card Issuers

According to CardData, the average rate among the top four issuers (Chase, Capital One, Bank of America, Citibank) was 2.40% for 4Q/18, compared to 2.27% for 3Q/18 and 2.34% for 4Q/17.

The uptick in credit card delinquency, coupled with a recession forecast, is loan-loss reserves increasing, the metrics are expected to rise throughout 2019, according to RAM Research.