NEW YORK — Credit card delinquency rates increased in September, even as net charge-offs declined, suggesting consumers are largely keeping up with their payments despite mounting financial pressures, according to the latest Credit Pulse report from Seeking Alpha.
The report, released Oct. 22, found the average credit card delinquency rate among seven major issuers rose to 2.62% in September, up from 2.51% in August and above the three-month average of 2.55%.
Meanwhile, the average net charge-off rate, which measures debt lenders have written off as unlikely to be collected after recoveries, declined to 2.09% from 2.15% in August. September’s rate was also below the three-month average of 2.12%.
“Against a backdrop of rising interest rates, consumers appear to be largely keeping up with payments, especially when looking at three-month moving averages,” the Seeking Alpha report stated.
Seven Major Issuers Tracked
Seeking Alpha’s Credit Pulse tracks monthly delinquency and net charge-off rates at seven major credit card issuers:
- American Express
- Bank of America
- Bread Financial
- Capital One
- Citigroup
- JPMorgan Chase
- Synchrony
The September findings suggest that while more consumers are falling behind on payments, the increase has not yet translated into higher rates of debt being written off by lenders.
Consumer Financial Cushion Shrinking
Separate research from PYMNTS Intelligence indicates consumers are facing increasing financial strain, even as their overall confidence remains relatively stable.
The September edition of the PYMNTS Consumer Expectations Index, titled “Consumers Hold the Line as Their Financial Cushion Shrinks,” found consumer sentiment declined 0.7 points to 54.1.
According to PYMNTS, the decline reflected weakening consumer views of the economy, purchasing conditions and job mobility.
The research also found rising living expenses are reducing the amount of time households could survive on their savings if their income were interrupted.
While consumers’ confidence in their ability to save remained relatively steady, inflation and other cost pressures are eroding the purchasing power of those savings, the report found.
“Confidence is holding steady, but rising costs mean savings buy less time than they used to,” PYMNTS stated.
The findings suggest households may be maintaining their financial obligations but have less flexibility to absorb unexpected expenses or income disruptions.
Equifax Sees Continued Consumer Resilience
Additional evidence of consumer resilience emerged during Equifax’s Oct. 20 earnings call, when executives said most Americans continue to demonstrate financial stability despite disproportionate inflationary pressures on lower-income and subprime borrowers.
Equifax Chief Financial Officer and Chief Operations Officer John Gamble said financial institutions have not exhibited some of the behaviors typically associated with expectations of an economic downturn.
“We have also not seen financial institutions increase their portfolio management reviews or decrease consumer credit lines, which are actions they typically take when they anticipate an economic downturn,” Gamble said.
