WASHINGTON—Card delinquencies and charge-offs do more than just offer evidence of the struggles many are having, they can also be a harbinger of spending slowdowns in the future, according to new payments.
The latest data from credit card giants, disclosed in SEC filings, show that card delinquencies were on the rise headed into the holiday shopping season, specifically into November and right into Black Friday and Cyber Monday, Pymnts.com said.
As CUToday.info has been reporting, credit union card portfolios have also been seeing rising levels of delinquencies, an issue NCUA has been flagging.
“Discover and Capital One, financial services firms that have long had significant presence with prime, near prime and subprime consumers, have disclosed their own data with similar results,” Pymnts.com stated. “Discover reported that 81% of credit card loans were made to borrowers with FICO scores 660 or above. The remaining 19% of loans would have been made to borrowers with subprime credit. The company noted in the filing that historically, delinquency rates and charge-offs are higher for consumers with lower FICO scores.”
In a separate filing with the SEC, Discover provided a monthly running snapshot of “loan pressures,” Pymnts.com said.
At November’s end, the net principal charge-off rate stood at 4.7%, and the delinquency rate of 3.8% was significantly above the corresponding rates of about 2.4% for both metrics in November of last year, Pymnts.com said.
What’s in Their Wallet
Data from Capital One showed 69% of card borrowers had credit scores above the 660 threshold, which leaves roughly a third of them below that level. The 30-day delinquency rate was 3.7% at the end of the third quarter of 2023, up from 2.8% last year.
Moreover, Capital One’s November data showed that card delinquency rates were 4.6%, while net charge-offs were 5.2%, Pymnts.com said.
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