NEW YORK–A credit card issuer that is partnered with some of the nation’s biggest retail brands is expressing concern issuers are currently seeing the “calm before the storm.”
Margaret Keane, a 40-year veteran of the credit card industry and CEO of Synchrony Financial, which is the biggest store credit card company in the U.S., told CNN Business she believes Americans will have trouble staying current on their credit card bills once-generous forbearance programs and a $600 boost to unemployment benefits expire.
"People got forbearance on credit cards, mortgages and auto loans. Everything got pushed out," Keane told CNN Business. "As forbearance and stimulus wears off, we're definitely in a rockier place. People got forbearance on credit cards, mortgages and auto loans. Everything got pushed out. As forbearance and stimulus wears off, we're definitely in a rockier place."
Add Synchony’s CFO Brian Wenzel, “It'll almost certainly get darker from here.”
Synchrony provides cards for businesses including Amazon, Lowe's and TJ Maxx and has offered customers three months of forbearance and also waived late fees and interest charges.
Card Limits Lowered
CNN Business noted Synchrony, whose share price is down 37% this year, is reining in consumers' ability to rack up credit card debt by lowering credit limits.
The credit card company said it has raised its provision for bad loans by $475 million, or 40%, during the second quarter. The surging credit costs drove a staggering 94% drop in Synchrony's bottom line.
The most recent company data show just 3.1% of the company's loans are 30-plus days past due. That's down from 4.4% a year ago. Net charge-offs as a percentage of total average loans stood at 5.4%, down from 6% a year ago.
Synchrony has enrolled 1.7 million customers with $3.2 billion of balances in the forbearance program since it launched earlier this year. Encouragingly, the company said nearly 70% of those customers have since left forbearance, CNN reported.