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July 21, 2022

Credit card stats provide some welcome cheer

Credit stats from the US, UK and Australia provide some positive news amid all the negative coverage relating to the possibility of recession

By Douglas Blakey

Amid all the economic doom and gloom with rising inflation and never-ending PR pitches relating to the cost-of-living crisis, thank goodness for some positive card metrics stats. Take Citi’s latest card numbers for example. Its credit card delinquency rate of just 0.79% is actually down from 0.90% a year ago. At Bank of America, its corresponding delinquency rate of 0.84% is down from 0.97% a year ago. The Bank of America net charge-off rate of 1.23% is down from 1.78% a year ago. At Citi, the charge-off rate of 1.23% is a marked improvement from 1.82% a year ago.

Moreover, in the US, consumer spend via credit cards continues to rise but at a modest rate that ought not to alarm any regulator. So much for all of those ludicrous, hysterical PR pitches over the past two or years forecasting the decline of the credit card due to millennials ditching the credit card in favour of buy-now-pay-later.

In the UK, the latest credit card stats out this week show that total credit card transactions in April are up by 23.7% year-on-year. Total spend rises by 28.3% year-on-year with outstanding credit card balances up by 9.5% y-o-y. Not much evidence there of BNPL supplanting the humble credit card.

Australia: strong post-pandemic rebound in searches for credit cards

In Australia, there is strong evidence that credit cards are back in vogue with consumers. I am obliged to the Australian comparison website Finty for sharing their research highlighting how Australian consumer search for credit cards has recovered significantly in 2022.

For example, travel-related keywords experienced the strongest growth, up 53% on average from 2021 to 2022. At the same time, some 81% of keywords in the study experienced growth from 2021 to 2022. Notably, 75% of keywords related to activating a new credit card were up from 2021 to 2022. As for the winners, search volume for credit cards from the Big Four banks is up 18% on average from 2021 to 2022 with ANZ +24%, CBA +48%, NAB +37% and Westpac -31%.

Meantime, to the surprise of few observers, Zip is however exiting Singapore and pulling the plug on business lending due and plans to prune its planned expansion of its product line-up. It seems prudent to attempt to target break-even of its core product before it goes off at a tangent by launching cryptocurrency and investment offerings.

Meantime, Klarna seems to be committed to investing heavily to target the US market, despite the collapse in its valuation. One is tempted to suggest that that can only result in yet another funding round being necessitated before too long.

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