Photo: Flickr Andres Rueda
Last week, Citigroup analysts warned that improving credit metrics, like falling delinquency rates, were at an “inflection point.”And it looks like they were right.
Earlier today, Bank of America said delinquencies rates rose in September, the first increase in a year. In fact, five of the six largest credit card issuers reported higher delinquency rates. According to Eileen Connelly of AP, this is the first time since February 2009 that this many major credit card issuers reported rising delinquency rates.
Citi analysts argued that weaker economic conditions and looser lending standards would cause credit metrics to deteriorate.
Regarding those looser lending standards, the WSJ’s Andrew Johnson reports that the number credit cards issued to subprime borrowers jumped 64% to 5.4 million through June. This compares to total credit card issuance, which is up just 27%.
Credit card companies will reach out to borrowers with lower credit quality in their efforts to boost revenues and remain competitive.