Credit Card Forbearance Skews Portfolio Metrics

Credit card forbearance has driven 30+ day delinquency, among the nation’s Top 100 credit card issuers, to drop to levels not seen in more than 30 years. As a result, credit card delinquency plunged to the historic 2.00% level in the third-quarter (3Q/20), and dropping another 39 basis points (bps) from the prior quarter, according to CardData.

Among the nation’s Top 4 issuers, representing more than 50% of the market, 30+ delinquency dropped to the lowest levels in more than seven years, according to figures gathered by RAM Research.

Besides waiving minimum payments and late payment fees, many issuers have reduced interest rates and in some cases, waived other fees, including annual fees. Accounts in good standing, and less than 180 days past due, are open to negotiation to lower total balances, according to CardTrak.

As with other economic indices, clearly the flexible pandemic response by card issuers presents a skewed reality, notes Robert McKinley, Senior Analyst for CardWeb. Credit card issuers worldwide have been operating in a fog for most of 2020.

30 Day Delinquency – Top 4 Peer Group

Early stage credit card delinquency (30+ days) for the third-quarter, among the nation’s Top 4 issuers, decreased 24 bps sequentially, and down 63 bps year-on-year (YOY).

The average rate among the Top 4 issuers (Chase [JPM], Capital One [COF], Bank of America [BAC], Citibank [C]) was 1.71% for 3Q/20, compared to 1.95% for 2Q/20 and 2.34% for 3Q/19. For the third-quarter of 2015, the Top 4 reported a U.S. credit card delinquency rate of 1.98%.

Delinquency among the Top 100 U.S. issuing banks in the third-quarter dropped 39 bps sequentially to 2.00%, and down 61 bps YOY. Nonetheless, the seasonally adjusted (SA) delinquency ratio is the lowest since at least 1990 according to PYRPTS.

Top 4 U.S. Issuer Q4 Credit Card Delinquency

Chase, reported U.S. credit card delinquency decreased sequentially 14 bps in 3Q/20, and down 27 bps YOY. Chase reported 3Q/20 delinquency of 1.57%, compared to 1.71% for 2Q/20 and 1.84% for 3Q/19. For the third-quarter of 2015, Chase reported a U.S. credit card delinquency rate of 1.38%. One-year ago Chase rose 13 bps from the prior quarter, and up 9 bps from the prior year.

Capital One, reported U.S. credit card delinquency dipped 53 bps in 3Q/20 from the prior quarter, but sharply down 150 bps from one-year ago. Capital One reported 3Q/20 delinquency of 2.21%, compared to 2.74% for 2Q/20 and 3.71% for 3Q/19. For the third-quarter of 2015, Capital One reported a U.S. credit card delinquency rate of 3.28%. One-year ago Capital One rose 31 bps from the prior quarter, and down 9 bps from the prior year.

Bank of America, reported U.S. credit card delinquency sequentially decreased 10 bps in 3Q/20, compared to a 45 bps drop YOY. Bank of America reported 3Q/20 delinquency of 1.59%, compared to 1.69% for 2Q/20 and 2.04% for 3Q/19. For the third-quarter of 2015, Bank of America reported a U.S. credit card delinquency rate of 1.71%. One-year ago Bank of America rose 8 bps from the prior quarter, and up 14 bps from the prior year.

Citibank, reported U.S. credit card delinquency dropped 19 bps in 3Q/20 from the prior quarter, and down 27 bps from one-year ago. Citibank reported 3Q/20 delinquency of 1.48%, compared to 1.67% for 2Q/20 and 1.75% for 3Q/19. For the third-quarter of 2015, Citibank reported a U.S. credit card delinquency rate of 1.54%. One-year ago Citibank rose 9 bps from the prior quarter, and up 23 bps from the prior year.

Credit Card Forbearance Outlook

Unless Congress passes substantial consumer and small business stimuli quickly, the U.S. credit card market will face a bleak 2021 with a mad dash to personal bankruptcy attorneys says Professor Cardworthy.

Historically, the 30+ day delinquency rate will rise 5 bps to 12 bps in the fourth-quarter. However, look for rates to stay the same or lower says Bankcenter and CardBuzz.

Exhibit 12-02 Quarterly Current/Historical Table: Four Largest U.S. Credit/Charge Card Issuers U.S. 30+ Day Delinquency (%) [2015-2020]

1Q/15: 1.96%
2Q/15: 1.83%
3Q/15: 1.98%
4Q/15: 2.04%
1Q/16: 1.95%
2Q/16: 1.87%
3Q/16: 2.12%
4Q/16: 2.24%
1Q/17: 2.19%
2Q/17: 2.11%
3Q/17: 2.27%
4Q/17: 2.34%
1Q/18: 2.24%
2Q/18: 2.07%
3Q/18: 2.27%
4Q/18: 2.40%
1Q/19: 2.36%
2Q/19: 2.18%
3Q/19: 2.34%
4Q/19: 2.42%
1Q/20: 2.40%
2Q/20: 1.95%
3Q/20: 1.71%

Exhibit 12-04 Quarterly Table: Chase U.S. Credit/Charge Card 30+ Day Delinquency (%) [2015-2020]

1Q/15: 1.41%
2Q/15: 1.29%
3Q/15: 1.38%
4Q/15: 1.43%
1Q/16: 1.45%
2Q/16: 1.40%
3Q/16: 1.53%
4Q/16: 1.61%
1Q/17: 1.66%
2Q/17: 1.59%
3Q/17: 1.76%
4Q/17: 1.80%
1Q/18: 1.82%
2Q/18: 1.65%
3Q/18: 1.75%
4Q/18: 1.83%
1Q/19: 1.85%
2Q/19: 1.71%
3Q/19: 1.84%
4Q/19: 1.87%
1Q/20: 1.96%
2Q/20: 1.71%
3Q/20: 1.57%

Exhibit 12-05 Quarterly Table: Capital One U.S. Credit/Charge Card 30+ Day Delinquency (%) [2015-2020]

1Q/15: 2.92%
2Q/15: 2.84%
3Q/15: 3.28%
4Q/15: 3.39%
1Q/16: 3.09%
2Q/16: 3.14%
3Q/16: 3.68%
4Q/16: 3.95%
1Q/17: 3.71%
2Q/17: 3.63%
3Q/17: 3.94%
4Q/17: 4.01%
1Q/18: 3.57%
2Q/18: 3.32%
3Q/18: 3.80%
4Q/18: 4.04%
1Q/19: 3.72%
2Q/19: 3.40%
3Q/19: 3.71%
4Q/19: 3.93%
1Q/20: 3.69%
2Q/20: 2.74%
3Q/20: 2.21%

Exhibit 12-06 Quarterly Table: Bank of America U.S. Credit/Charge Card 30+ Day Delinquency (%) [2015-2020]

1Q/15: 1.81%
2Q/15: 1.68%
3Q/15: 1.71%
4Q/15: 1.76%
1Q/16: 1.68%
2Q/16: 1.58%
3Q/16: 1.64%
4Q/16: 1.73%
1Q/17: 1.78%
2Q/17: 1.71%
3Q/17: 1.79%
4Q/17: 1.92%
1Q/18: 1.93%
2Q/18: 1.79%
3Q/18: 1.90%
4Q/18: 2.02%
1Q/19: 2.08%
2Q/19: 1.96%
3Q/19: 2.04%
4Q/19: 2.09%
1Q/20: 2.07%
2Q/20: 1.69%
3Q/20: 1.59%

Exhibit 12-07 Quarterly Table: Citibank U.S. Credit/Charge Card 30+ Day Delinquency (%) [2015-2020]

1Q/15: 1.68%
2Q/15: 1.49%
3Q/15: 1.54%
4Q/15: 1.58%
1Q/16: 1.58%
2Q/16: 1.37%
3Q/16: 1.62%
4Q/16: 1.67%
1Q/17: 1.62%
2Q/17: 1.51%
3Q/17: 1.59%
4Q/17: 1.62%
1Q/18: 1.63%
2Q/18: 1.52%
3Q/18: 1.62%
4Q/18: 1.70%
1Q/19: 1.79%
2Q/19: 1.66%
3Q/19: 1.75%
4Q/19: 1.80%
1Q/20: 1.88%
2Q/20: 1.67%
3Q/20: 1.48%