NEW YORK–Losses on credit cards are growing among the nation’s biggest issuers.
According to Fitch Ratings, the average net charge-off rate for large U.S. card issuers increased to 3.29% in the second quarter, its highest level in four years. Fitch reported Q2 was also the fifth consecutive period of year-over-year increases in net charge-offs.
All eight large issuers, including J.P. Morgan Chase & Co., Citigroup, Capital One, and Discover, all reported increases in their charge-off rates, according to the Wall Street Journal.
However, it should be noted that despite the increase in losses on consumer cards, charge-off rates remain below historical levels, including the 10% peak big issuers experienced in 2010, the Journal reminded.
“The overall environment is deteriorating,” David Nelms, chief executive at Discover told the Wall Street Journal in an interview. It is “not quite as favorable as it was over the past few years.”
Rising balances, however, have also coincided with the recent loan losses and, analysts note, put a dent in what has been one of the healthiest credit-card markets on record, the Journal added.
The Wall Street Journal further reported that “while overall consumer balance sheets look healthy, according to Federal Reserve data, some numbers suggest they are starting to stretch.” It cited in addition to the card losses other data showing that non-mortgage consumer debt payments, including credit cards and auto loans, account for the largest share of consumers’ after-tax income since 2009.