Prudence is the wisest course of action when navigating the credit cycle and getting ready for what’s coming next. Not only for the lenders, but also for the borrowers.
The banking and credit card firms have remarked that consumers have remained resilient so far during earnings season and that credit trends, as indicated by delinquencies and charge offs, are somewhat worsening but not drastically so.
The lenders are doing what they must to achieve this goal, which includes increasing their provisions for loan losses while sifting through the files and commentary. One of the more recent companies to demonstrate good financial performance and the rapid pace of the digital revolution is Discover Financial.
However, there are other variables worth keeping an eye on that indicate the persistent pressures that could particularly strain the paycheck-to-paycheck economy. The customers’ own increased interest in debt consolidation suggests that they have developed a personal strategy for coping with the growing weight of debt.
The credit card 30-day delinquency rate increased to 2.1% in the most recent quarter, up from 1.8% in the second quarter of this year and 1.5% last year, according to supplements and financial data from the firm issued last week. Further investigation reveals that the private student loan delinquency rate increased from 1.6% to 1.9%.
