Credit Card Delinquency Rates Rising … Are More Placements on the Way?

“Plumes of smoke” in the form of rising delinquency rates are starting to rise through the ranks of the credit card sector, but whether that smoke will turn to fire and lead to more defaults and placements within the accounts receivable management industry is still too early to determine.

The Data: A handful of credit card issuers have released their second quarter financials, and each of them have reported delinquency and loss rates that were higher than the same point in the calendar last year.

  • The 30-day delinquency rate at Synchrony Financial was 3.1% at the end of August, up from 2.9% a month earlier and 2.3% at this point last year.
  • The delinquency rate at Discover Financial Services is up to 1.8%, from 1.4% last year.
  • The overall delinquency rate on credit card loans held by commercial banks is up to 1.8%, from 1.6%.

No Cause for Concern … Yet: While rising, those delinquency levels are still well below what happened during the second quarter of 2020, when the country was grappling with the onset of the COVID-19 pandemic. Back then, the delinquency rate on credit cards topped out at 2.4%.

What it Means: The ARM industry has been suffering through a period of very low placement volume. Signs that the volume of placements might be on the upswing is sure to be welcome news for agencies of all shapes and sizes. The situation, though, is still a long way off from being something to write home about.

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