US banks have had to write off more credit card losses in the second quarter than at any time in the last four years as the US economy tanks due to the Fed Reserve’s interest rate rises.
The trillion plus dollar student debt bubble is also in the process of imploding as more and more students and parents can’t service payments in a deteriorating economy.
Credit card losses rising in worrying trend for U.S. economy, banks
Jul. 31, 2017 7:23 PM ET|By: Carl Surran, SA News Editor
The average net charge-off rate for large U.S. card issuers rose to 3.29% in Q2, its highest level in four years and the fifth consecutive quarter of Y/Y increases, Fitch Ratings reports.
All eight of the largest issuers – JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), CapitalOne (NYSE:COF), Discover (NYSE:DFS), U.S. Bank (NYSE:USB), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC) and American Express (NYSE:AXP) – saw increases for the quarter.
“The overall environment is deteriorating,” DFS CEO David Nelms tells WSJ, noting the new string of losses in the industry after 24 quarters of declines.
The trend of losses is occurring even amid near-record lows in U.S. unemployment, raising fears that credit performance could quickly weaken if the jobs situation weakens.
“We’ve seen an inflection point in credit,” says Charles Peabody, managing director at Compass Point Research & Trading. “It is going to get worse from here.”