WASHINGTON—The delinquency rate on credit card loan balances at the 4,788 small commercial banks in the United States spiked during Q1 to 5.9%, according to the Federal Reserve Board of Governors.
This exceeds the peak during the Financial Crisis, reported Business Insider.
The credit card charge-off rate at these banks spiked to 8%, approaching the peak during the Financial Crisis, Business Insider reported.
“The large banks have been offering appealing incentives to consumers for years, and they've been going after consumers with the higher credit ratings, and they've been following good underwriting practices – having not yet forgotten the lesson from the last debacle – and this conservative approach is now helping to keep losses down,” Business Insider said. “But the thousands of smaller banks couldn't compete with those offers, and so they got deeply into subprime cloaked in sloppy underwriting.”