Finance & Economics

Amex and Bank of America Face Rising Card Delinquencies

Last month, American Express and Bank of America recorded an increase in credit card delinquencies.

Amex and Bank of America Face Rising Card Delinquencies

The report of the U.S. Securities and Exchange Commission contains information that American Express’ delinquency rate at the end of November was fixed at 1.4%. A month earlier, this figure was 1.3%. The current level of overdue debt faced by the mentioned company is lower than the figure that existed before the coronavirus pandemic.

Bank of America reported that the indicator of delinquency on the BA Master Trust II credit card rose to 1.4% in November. A month earlier, this figure was 1.37%. In November 2019, the delinquency rate on the specified credit card was 1.63%.

The lender Synchrony Financial also recorded an increase in the overdue debt index. In this case, the mentioned figure was 4.7% in November after 4.6% in October.

This year, the total amount of credit card debt owed by residents of the United States has increased to $1.08 trillion. Experts say that this dynamic is the result of the so-called financial behavior of millennials.

Data released last month by the Federal Reserve Bank of New York shows that credit card balances have increased by $154 billion compared to 2022 figures. This growth indicator is the largest increase since 1999 when the specified financial institution began tracking the mentioned data.

Donghoon Lee, economic research advisor at the New York Fed, says that there was a significant jump in credit card balances in the third quarter of this year. According to him, this trend is consistent with an increase in consumer spending and a growth in real GDP. He also said that the increase in the number of credit card delinquencies is correlated depending on income level and region, but is especially noticeable among millennials and those with car loans or student loans.

The Federal Reserve’s report on consumer lending, released in December, indicates that the total volume of loans in October increased by $5.2 billion compared with the amount recorded in the previous month. At the same time, this dynamic is a significant slowdown compared to September, when the mentioned figure has grown by $12.2 billion.

Revolving credit, which includes credit cards, increased by 2.7% in October. In September, the growth of this indicator was 4.1%. Non-revolving credit in October, which is a category that includes car loans and student loans, increased by 0.7%. In September, the growth of this indicator was 2.5%.

The data shows that the total amount of revolving credit held in depository institutions in October amounted to $1.258 trillion. In September of the current year, the figure was equal to $1.254 trillion. The amount held by non-financial businesses was fixed at $19.2 billion in October. In September, this figure was equal to $19.1 billion.

In the United States, there is also an increase in consumer interest in switching to alternative sources of credit. At the same time, in this case, it means mainly a combination of the use of traditional credit cards and other products in the sphere of relevant financial services. For example, more than 40% of Americans intend to simultaneously use the offers of BNPL suppliers (Buy Now, Pay Later) and the solutions of credit card companies.

As we have reported earlier, American Express Allows Spending of Rewards on Amazon.

Serhii Mikhailov

2353 Posts 0 Comments

Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.