Bank Card Default Rate Continues to Increase

An expansion in consumer spending is starting to show in bank card defaults, according to S&P Experian.

1/30/2018 8:00 AM

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Bank Card Default Rate Continues to Increase

The bank card default rate recorded in December reflects the largest monthly increase since May 2017, according to the latest S&P Experian Consumer Credit Default Indices report.

“The indices represent a comprehensive measure of changes in consumer credit defaults and show that the composite rate increased two basis points from last month to 0.91 percent,” according to the report.

The bank card default rate increased 16 basis points to 3.44 percent, the largest monthly increase since May 2017.

“The default rate on bank cards has been rising consistently since December 2015,” David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said in a news release. “Defaults on auto loans are up slightly and first mortgage defaults are little changed over the last two to three years. Continued low unemployment and low inflation, rising home prices and stock market gains combined with gains in consumer confidence to support strong gains in retail sales in the last four months of 2017.”

However, the same growth in consumer spending is now appearing in the bank card default data, according to S&P Experian.

The auto loan default rate in December declined one basis point from November to 1.10 percent. This marks the first monthly decrease in auto loan defaults since June 2017.

The first mortgage default rate increased two basis points to 0.68 percent.

The S&P/Experian report, which also tracks default rates in major U.S. cities, indicated that all five major cities saw their composite default rates rise in December.

Chicago’s increase was the largest, up six basis points to 1.15 percent. Dallas recorded an increase of three basis points to 0.85 percent, while New York was two basis points higher in December at 0.95 percent, according to the report. The default rates for Los Angeles and Miami both increased one basis point from November, to 0.77 percent and 0.98 percent, respectively.

“The data are also showing some changes among the five cities tracked in this release. Chicago has now experienced the highest consumer credit default rate for three months running,” Blitzer said in the news release. “For a long time, Miami’s default rate was the highest across the five cities. The first mortgage default data dominate the city-level default indices. During the financial crisis, Miami experienced large declines in home prices which led to an increase in the mortgage defaults. As Miami home prices have recovered, its overall consumer credit default rate is no longer an outlier.”


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


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Bank Card Default Rate Continues to Increase

The bank card default rate recorded in December reflects the largest monthly increase since May 2017, according to the latest S&P Experian Consumer Credit Default Indices report.

“The indices represent a comprehensive measure of changes in consumer credit defaults and show that the composite rate increased two basis points from last month to 0.91 percent,” according to the report.

The bank card default rate increased 16 basis points to 3.44 percent, the largest monthly increase since May 2017.

“The default rate on bank cards has been rising consistently since December 2015,” David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said in a news release. “Defaults on auto loans are up slightly and first mortgage defaults are little changed over the last two to three years. Continued low unemployment and low inflation, rising home prices and stock market gains combined with gains in consumer confidence to support strong gains in retail sales in the last four months of 2017.”

However, the same growth in consumer spending is now appearing in the bank card default data, according to S&P Experian.

The auto loan default rate in December declined one basis point from November to 1.10 percent. This marks the first monthly decrease in auto loan defaults since June 2017.

The first mortgage default rate increased two basis points to 0.68 percent.

The S&P/Experian report, which also tracks default rates in major U.S. cities, indicated that all five major cities saw their composite default rates rise in December.

Chicago’s increase was the largest, up six basis points to 1.15 percent. Dallas recorded an increase of three basis points to 0.85 percent, while New York was two basis points higher in December at 0.95 percent, according to the report. The default rates for Los Angeles and Miami both increased one basis point from November, to 0.77 percent and 0.98 percent, respectively.

“The data are also showing some changes among the five cities tracked in this release. Chicago has now experienced the highest consumer credit default rate for three months running,” Blitzer said in the news release. “For a long time, Miami’s default rate was the highest across the five cities. The first mortgage default data dominate the city-level default indices. During the financial crisis, Miami experienced large declines in home prices which led to an increase in the mortgage defaults. As Miami home prices have recovered, its overall consumer credit default rate is no longer an outlier.”


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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