First quarter credit card delinquencies are a mixed bag. JPMorgan Chase and Wells Fargo report a slight increase while Citi’s numbers show a small decrease.
Specifically, Chase’ 30+ day delinquency rate rises by 9 basis points from the prior quarter to 2.23% in Q1. This time last year, the corresponding rate was 1.68%. The Q1 30+ day credit card delinquency rate rises by 12 basis points to 2.92% at Wells Fargo. This compares to 2.18% a year ago.
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Citi’s branded cards 30+ day rate dips by 2 basis points to 1.01% in Q1. A year ago it was 0.76%.
Ongoing high interest rates continue to impact delinquencies. Until and unless inflation drops further, the Fed will not cut interest rates. And until that scenario plays out, credit card delinquency rates will remain elevated.
The average credit card interest rate remains at around 21%. Prior the pandemic, the rate was around 15%. Meantime, there is no evidence of a slowdown in spending. For example, Wells Fargo credit card POS volume rose by 14% y-o-y in the first quarter. US credit card balances rose by $50bn to $1.13trn in the fourth quarter of 2023. The fourth quarter of 2023 represented the ninth successive quarter of increased outstanding credit card balances.
The Federal Reserve Bank of New York in Q2 of 2023, reported that the average US credit card balance was $5,733 per cardholder. The Fed estimates that around 6% of all credit card balances are in serious delinquency. That is more than double the rate of just two years ago.
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