Credit-card losses edge higher, bad news for U.S. banks

Credit-card losses are outpacing auto and home loans at a rate not seen in at least a decade. The question is whether banks’ plastic problem is an outlier or an omen.

For now, there’s no cause for panic. The strong U.S. economy and low unemployment means most consumers are able to stay current on debt payments — new foreclosures and bankruptcies fell to the lowest level in at least 15 years in 2018. Yet the uptick in card losses is unmistakable. Credit-reporting company Experian Plc said some of the blame goes to banks offering credit to riskier borrowers, and the Federal Reserve has noted a spike in late payments by the elderly.

Plastic Problem

More credit-card debt is becoming seriously delinquent

Source: Federal Reserve

Note: Fed counts debt that’s 90 days past due as seriously delinquent

“We do see card delinquencies a little higher and a slight uptick in the most recent couple of quarters,” Matt Komos, TransUnion’s vice president of research and consulting, said in an interview, adding that he doubts the trend is a harbinger of bad news for banks. “Delinquencies, while moving upward, are probably hitting a more normal level for the amount of credit that’s out there.

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