Rising Delinquency Rate Slowing US Credit Card Growth
Rising delinquency rates will undoubtedly slow the growth of credit card debt and act as a drag on economic growth, CreditSights says in a new report. “However, it is also possible that falling credit card growth may be the result of card companies responding to higher losses by cutting borrowers’ limits.”
Key points of the report:
- Credit card debt has grown by roughly $50 billion a year for the past three years.
- Delinquencies and charge offs are roughly back to the levels seen before the law was enacted.
- The growth in credit card balances has tended to fall in response to higher delinquencies.
…if delinquencies were to rise another 125 bp to 6%, year-on-year credit card growth would be zero.
“While it is debatable whether the growth in consumer revolving credit will prove to be low, zero or even negative, we think it certain that credit card balances over the next 18 months will grow at less than the $50 billion they have averaged over the past 3 years. And although even the complete removal of this spending will not bring the US economy to its knees, it is another straw for the camel’s back.”
For details see: Credit Card Performance – Another Straw for the Camel’s Back.
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
