Credit card delinquency rates continued to slowly climb toward prepandemic levels in September, according the the average of seven banks monitored by Seeking Alpha. The average rate of 2.13% rose from 2.05% in August and from 1.89% in July.
For some perspective, though, the average delinquency rate was 2.83% in September 2019, before COVID-19 prompted massive fiscal relief programs that led to the ultra-strong credit measures since then.
The biggest month-over-month jump in delinquency occurred at Bread Financial (NYSE:BFH), which saw a 40 basis point increase to 5.7%, followed by Capital One (NYSE:COF), which saw a 21 bp boost, and Synchrony Financial (NYSE:SYF), with a 20 bp increase.
The average net charge-off rate, though, took a breather from increasing in September. That average rate of 2.09% slipped from 2.13% August, but still was higher than 2.02% in July. By comparison, the average net charge-off level three years earlier was 3.43%.
The biggest increase in net charge-offs for the month, was Capital One (COF), with a 21 bp rise to 2.23%. Meanwhile, charge-off rates fell at three of the banks in the list, with Bread Financial (BFH) seeing its NCO fall 30 bps and Synchrony (SYF) registering a 10 bp dip.
Looking back to 2019, Bread Financial’s (BFH) credit metrics are the closest to its prepandemic level. Delinquency rate of 5.7% in September 2022 compares with 5.9% three years earlier. NCO rate of 5.0% compares with 5.3% in 2019.
|Bank of America||NYSE:BAC||delinquency||0.92%||0.88%||0.85%||0.87%|
Note that Discover Financial (DFS) doesn’t report monthly credit metrics for the last month of each quarter. For Q3, the company reported credit card delinquency rate of 2.11%, up 35 basis points from the prior quarter, and its net charge-off rate of 1.92% fell 9 basis points from the prior quarter.
Earlier in the month, SA contributor Seeking Profits put a Conviction Buy on Capital One (COF), saying consumer credit fears are overblown