U.S. card late payers continue to creep upward to levels not seen since 2013 and running about 40 bps (basis points) above ratios reported five years ago.
Delinquency among the Top 100 U.S. issuing banks in the third-quarter edged up 1 bps sequentially, and up 8 bps YOY (year-on-year). Nonetheless, the seasonally adjusted (SA) delinquency ratio is the highest since the first-quarter of 2013.
Third-quarter card delinquency, among the nation’s top four credit card issuers, continued to march upward to its highest level for a third-quarter since 2013 and rose significantly from the prior quarter. Noteworthy is the fact all four of the nation’s top bank credit card issuers posted sequentially gains in delinquency. On an annual basis, all but Capital One, posted gains. Capital One has been tightening in its sub-prime market segment for the past six quarters, according to analysis by CardData, PYRPTS and CardBuzz.
According to the S&P/Experian Consumer Credit Default Indices for October, also released this week, the overall rate in consumer credit defaults was unchanged. The bank card default declined 44 bps to 2.88%. The auto loan default rate dipped 2 bps and the first mortgage default rate nudged up 4 bps to 077%. These data are not seasonally adjusted and are not subject to revision. The Indices are calculated based on data extracted from Experian’s consumer credit database.
Historically, the delinquency rate will rise 13 bps to 15 bps in the third-quarter. Therefore, the 2019 rate of increase is slightly higher for a third-quarter but continues to grow over the past seven years. Last year, the third-quarter YOY was flat, but rose 15 bps in 2017 and 14 bps in 2016, according to analysis by RAM Research.
If short-term interest rates hold and employment remains strong it is likely the delinquency rate will mirror 2018, rising by 14 bps at the end of 2019 to 2.48%. However, the current trade tariff war, currency devaluation and politcally-driven short-term interest rates cuts, plus a looming, long-overdue global recession could send all credit card metrics off the map in 2020 and 2021, notes Robert McKinley, Senior Analyst of CardData, CardFlash and head of PYRPTS and Ruebud Media.
Top 100 U.S. Credit Card Delinquency
The 30+ day delinquency rate, seasonally adjusted, among the top 100 U.S. banks for the third-quarter (3Q/19) increased 1 bps from the prior quarter, and up 8 bps year-on-year (YOY).
On a not seasonally adjusted basis (NSA), the delinquency rate among the top 100 U.S. banks for 3Q/19, soared 25 bps from 2Q/19, and up 8 bps YOY.
The top 100 U.S. banks posted a 30+ day SA delinquency rate of 2.58% for 3Q/19, compared to 2.57% in 2Q/19, and 2.50% for 3Q/18.
On a NSA basis the top 100 U.S. banks posted a 30+ day delinquency rate of 2.56% for 3Q/19, compared to 2.31% in 2Q/19, and 2.48% for 3Q/18, according to figures released this week by the Federal Reserve.
Top 4 U.S. Credit Card Delinquency
The average rate among the Top 4 issuers (Chase [JPM], Capital One [COF], Bank of America [BAC], Citibank [C]) was 2.34% for 3Q/19, compared to 2.18% for 2Q/19 and 2.27% for 3Q/18. For the third-quarter of 2015, the Top 4 reported a U.S. credit card delinquency rate of 1.98%, according to figures collected by CardData and Bankcenter.
Chase, reported U.S. credit card delinquency sequentially increased 13 bps in 3Q/19, and up 9 bps gain YOY. Chase reported 3Q/19 delinquency of 1.84%, compared to 1.71% for 2Q/19 and 1.75% for 3Q/18. For the third-quarter of 2015, Chase reported a U.S. credit card delinquency rate of 1.38%. One-year ago Chase rose 10 bps from the prior quarter, and down 1 bps from the prior year.
Capital One, reported U.S. credit card delinquency soared 31 bps in 3Q/19 from the prior quarter, and down 9 bps from one-year ago. Capital One reported 3Q/19 delinquency of 3.71%, compared to 3.40% for 2Q/19 and 3.80% for 3Q/18. For the third-quarter of 2015, Capital One reported a U.S. credit card delinquency rate of 3.28%. One-year ago Capital One rose 48 bps from the prior quarter, and down 14 bps from the prior year.
Bank of America, reported U.S. credit card delinquency sequentially increased 8 bps in 3Q/19, compared to a 14 bps gain YOY. Bank of America reported 3Q/19 delinquency of 2.04%, compared to 1.96% for 2Q/19 and 1.90% for 3Q/18. For the third-quarter of 2015, Bank of America reported a U.S. credit card delinquency rate of 1.71%. One-year ago Bank of America rose 11 bps from the prior quarter, and up 11 bps from the prior year.
Citibank, reported U.S. credit card delinquency edged up 9 bps in 3Q/19 from the prior quarter, and up 13 bps from one-year ago. Citibank reported 3Q/19 delinquency of 1.75%, compared to 1.66% for 2Q/19 and 1.62% for 3Q/18. For the third-quarter of 2015, Citibank reported a U.S. credit card delinquency rate of 1.54%. One-year ago Citibank rose 10 bps from the prior quarter, and down 3 bps from the prior year.