Top US Banks See Credit Card Delinquencies Rise to 2.5% in July

Seven leading banks saw their average credit card delinquency rate inch upward to 2.50% in July from 2.48% the previous month, according to Seeking Alpha's July Credit Pulse analysis published Tuesday.

The current figure sits below the 2.68% pre-pandemic average, suggesting credit quality remains relatively stable despite the modest uptick.

The analysis drew on data from American Express, Bank of America, Bread Financial, Capital One, Citigroup, JPMorgan, and Synchrony.

While delinquencies edged higher, the same group of banks reported improved performance on charge-offs. The average net charge-off rate dropped from 3.42% in June to 3.28% in July.

Total credit card lending among the seven institutions declined 0.2% month-over-month, reaching $538.4 billion in July.

Meanwhile, the Federal Reserve's July Senior Loan Officer Opinion Survey indicated that standards tightened for credit card loans during the second quarter, though demand remained essentially flat.

Visa disclosed in late July that US payment volumes had moderated somewhat by July 21, following an earlier spike not seen since fiscal 2019 outside the post-pandemic rebound.

Chief Financial Officer Chris Suh attributed the surge to a confluence of factors: tax refunds, fuel prices, retail promotions, Visa Direct activity, and FIFA-related spending.

Despite widespread narratives about consumers pulling back amid inflation and economic uncertainty, recent earnings data from Synchrony showed cardholders continuing to spend.

The lender reported an 8% year-over-year increase in purchase volume during the second quarter, climbing from $46.1 billion to $49.8 billion.

There's this perception given gas prices and inflation that the consumer is going to bend or come under a lot of duress. Sales accelerated, even though gas prices are up, inflation was up, but [consumers] continue to spend,

Synchrony Executive Vice President and CFO Brian Wenzel told PYMNTS CEO Karen Webster, noting that spending remained strong even in discretionary categories.