The U.S. credit card delinquency and charged off rates declined/were stable in July 2021 for majority of issuers. The trend seems to be driven by continued fiscal support and households’ strong liquidity position. These are, thereby, enabling customers to remain current on their payments.

Details

Bank of America’s (BAC Quick QuoteBAC - Free Report) delinquencies declined to 0.92% in July from June’s 0.97%, while charge-off rate of 1.61% was down from 1.78%. Also, JPMorgan’s (JPM Quick QuoteJPM - Free Report) delinquency rate of 0.64% fell from the prior month’s 0.67%. Its rate of losses on credit card loans decreased 16 basis points (bps) in July to 1.14%.

Similarly, for Citigroup (C Quick QuoteC - Free Report) credit card charge-off rate decreased 30 bps to 1.52% in the reported month, while its delinquency rate fell 3 bps from the prior month to 0.87%. For Synchrony Financial’s (SYF Quick QuoteSYF - Free Report) adjusted charge-off rate plunged 110 bps to 2.20% in July, while the company’s core delinquencies were stable at 2.10%.

Discover Financial’s (DFS Quick QuoteDFS - Free Report) delinquency rate decreased to 1.42% in the reported month from 1.43% in June, while its charge-off rate declined 46 bps to 1.72%. American Express’ (AXP Quick QuoteAXP - Free Report) rate of delinquencies and charge off rates were both stable at 0.60% and 0.70%, respectively.

However, another major credit card issuer, Capital One’s (COF Quick QuoteCOF - Free Report) delinquency rate rose 3 bps to 1.71%. The company’s charge-off rate decreased to 1.45% from 2.12% in June.

Our Take

As stimulus payments and economic recovery continue to help consumers in lowering their credit card debts, there is less chance that net charge-offs and delinquency rates will rise substantially in the near term. Also, solid household balance sheet and liquidity position offer support. Thus, this will keep aiding banks’ credit quality to a great extent.