Credit card delinquencies among major U.S. issuers edged up to 2.62% in September, moving past the three-month average of 2.55% even as net charge-offs decreased, according to Seeking Alpha’s Credit Pulse.
Consumer Solvency Under Pressure from Persistent Inflation
- Average credit card delinquencies climbed to 2.62% in September, up from 2.51% in August.
- Net charge-off rates moved in the opposite direction, declining to 2.09% in September compared to 2.15% the previous month.
- The PYMNTS Consumer Expectations Index fell 0.7 points to 54.1, highlighting a contraction in household financial cushions.
Delinquency Rates Rise Across Seven Major Lenders
The monthly tracking report covers credit card portfolios at seven major issuers: American Express (NYSE: AXP), Bank of America (NYSE: BAC), Bread Financial, Capital One (NYSE: COF), Citigroup (NYSE: C), JPMorgan Chase (NYSE: JPM), and Synchrony Financial. While the average delinquency rate ticked upward from August’s 2.51% reading, the broader three-month moving average sat at 2.55%.
Conversely, the average net charge-off rate—debt that issuers write off as uncollectible—dropped to 2.09% in September from 2.15% in August. This figure also registered 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 Credit Pulse report noted.
Shrinking Savings Cushions Threaten Household Stability
Beneath steady payment records, broader sentiment indicators reveal mounting strain on household balance sheets. The September edition of the PYMNTS Consumer Expectations Index, titled “Consumers Hold the Line as Their Financial Cushion Shrinks,” registered a drop of 0.7 points to 54.1. The survey-based measure tracks U.S. consumer sentiment, capturing weakened views on the broader economy, purchasing conditions, and job mobility.
Rising living costs continue to erode the longevity of emergency savings should primary income streams halt. The report used an automotive analogy to describe the phenomenon: a car burning fuel at a faster rate due to a longer commute empties the tank quicker, even though tank capacity remains unchanged. Household savings operate similarly, as inflation accelerates how fast financial reserves deplete.
Lenders Maintain Current Credit Limits Amid Subprime Pressures
Data, analytics, and cloud technology provider Equifax (NYSE: EFX) reported during an October earnings call that inflation has disproportionately affected lower-income and subprime borrowers. However, the majority of the consumer base continues to show resilience.
“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,” Equifax Chief Financial Officer and Chief Operations Officer John Gamble stated during the call.
| Metric | August Data | September Data | Three-Month Average |
|---|---|---|---|
| Average Delinquency Rate | 2.51% | 2.62% | 2.55% |
| Average Net Charge-Off Rate | 2.15% | 2.09% | 2.12% |
| Consumer Expectations Index | 54.1 | N/A |
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
