RIVERWOODS, Ill.—Another sign that Americans may be getting too deep in debt--Discover Financial Services is seeing a marked rise in charge-offs.
Discover, typically known for signing up good borrowers who pay on time, has seen its fortunes reverse in a year, according to Crain’s Chicago Business.
“As 2018 dawns, Discover Financial Services finds itself a leader in an unfamiliar category: bad credit card loans. Probably not coincidentally, the company is growing its credit card balances at twice the rate banking giants like JPMorgan Chase and Bank of America are. Discover has gone in a year from nearly best-in-class in terms of customers who stay current on their credit cards to nearly worst-in-class,” Crain's Chicago Business said.
Among the major card issuers, only Capital One will be expected to have higher charge-offs, Crain's reported.
But Crain’s noted that Capital One lends to subprime borrowers, unlike Discover.
“Discover's card-loan write-offs aren't at alarming levels. It posted charge-off rates of 3% in October and 3.1% in both November and December. But those numbers are 0.5 percentage points above the same timeframe the year before. No other major issuer that's posted fourth-quarter results so far has shown such an acceleration in bad loans,” Crain's stated.
As CUToday.info has extensively reported, analysts have cautioned that consumer debt, particularly card debt, is reaching unmanageable levels, hitting record levels by the end of 2017. Experts first reported problems among subprime borrowers, but more recent reports show problems are extending into all FICOs.