Rising Credit Card Defaults Are Reported by 1/1/2020 Credit & Collection E-Newsletter
Rising credit card defaults are reported by 1/1/2020 Credit & Collection e-newsletter: Consumer credit card losses, or charge-offs, among the Top 100 U.S. banks, are continuing to rise to levels for a third-quarter not seen since early 2013. Meanwhile, delinquency, the precursor of charge-offs, is also hovering at seven-year highs. The trends are concerning to card issuers as it adds more evidence the U.S. economy is headed into a downturn in 2020, or already unraveling. Third-quarter card charge-offs among the Top 4 U.S. bank credit card declined sharply from the prior quarter, a historical pattern, but up slightly from one-year ago, remaining the highest for a third-quarter in seven years. Credit card charge-offs among the nation’s Top 4 credit card issuers decreased 36 bps (basis points) sequentially in the third-quarter (3Q/19), and up 3 bps year-on-year (YOY). Additionally, loan loss reserves for credit card or consumer banking among the Top 4 increased 9.9% YOY. Chase boosted credit card loan loss reserves by 10.9% or $549 million from one-year ago, and Citibank loan loss reserves rose by 12.1%. Capital One and Bank of America likewise boosted loan loss reserve for the third-quarter, according to analysis by RAM Research.