US Bankcards Industry Benchmarking Trends: 2024 Q1 Update (2024)

by Leanne Marshall

Principal Consultant

Economic Context

The US economy has been difficult to judge by many commonly used standards. The likelihood of recession in 2024 remains low but is heavily dependent on the employment environment – if the unemployment rate ticks higher by 0.1-0.2% in the next few months it could trigger a recession warning (according to the Sahm Rule). Many other signals show the economy may be slowing:

With the uncertainty in the macro environment, many issuers have tightened credit availability and are monitoring delinquency and loss rates. The data shared below from the FICO® Risk Benchmarking solution shows a continuing upward trend in credit usage and stabilizing early-stage delinquency rates. We’ll dig further into credit card trends that represent a national sample of approximately 130 million US accounts gathered from FICO client reports generated by FICO® TRIAD® Customer Manager and Adaptive Control System solutions.

Higher interest rates on credit cards and increasing monthly spend to cover everyday purchases has led the average credit card balance on an increasingly upward trend since February 2022. As of March, the average credit card balance was $2,652, a 4.8% increase compared to March 2023. The active rate, defined as a credit card account being used for transactions or to carry a balance, has remained steady during the past two years at ~52%. This rate is 300 bps higher than the average active rate prior to the pandemic.

Although higher activity and usage of credit cards can be positive for lenders, it can also lead to potential problems if consumers cannot pay back their debts. In March the risk benchmarking data shows the credit card payment rate (percentage of previous month’s balance that was paid back) has leveled off at 27.2% despite a downward slide from its peak of 30.6% in May 2022. The positive news is that the payment rate in March is substantially higher than the pre-COVID average rate of 23.0% and is comparable to the payment rate in March 2023 of 27.6%. However, the percentage of active cardholders only paying the minimum amount due continues to climb, increasing from 6.4% in March 2023 to 7.3% this year. If a consumer does not pay their balance back in full at the end of the billing period they will owe interest on the remaining balance - ~55% of active cardholders are paying interest on their credit card balances each month.

In working with clients, many issuers are still experiencing unit and balance delinquency rates on the rise depending on the risk make-up of their portfolio. But overall, the US bankcard industry 1-cycle and 2-cycle unit rates are flattening, and we are seeing the typical seasonal decrease in rates due to tax refunds.

The proportion of credit card accounts that have missed one payment is flat at 6.0% from March 2023 to March 2024. The percentage of balances that are delinquent is also flat at 6.2% year-over-year. This is the first time in the last three years that we have witnessed early-stage delinquency slowing down after 20%+ year-over-year increases throughout 2023.

In addition to 1-cycle rates flattening, growth in the proportion of consumers missing two payments is slowing as well. Instead of 30-50% year-over-year increases, the proportion of credit card accounts that are two payments past due is 9.6% higher in March 2024 compared to March 2023 and the proportion of credit cards balances that are two payments past due is 17.2% higher year-over-year.

Considering what we have experienced since mid-2022 with rising inflation and higher interest rates leading to increased debt loads, the risk benchmarking data is finally showing positive changes for key metrics in the US bankcard industry. The Federal Reserve’s decisions on lending rates will impact issuers and consumers’ ability to lend and pay back debt.

It is critical as a risk manager to monitor credit card portfolio metrics frequently along with regularly updating loss forecast models. Credit card issuers can reach out to your FICO Solution Success Advisor or FICO Key Account Managers for a discussion and assessment, if you need help completing an evaluation of your portfolio.

If you are a consumer who is struggling, there are tools available at myFICO.com to help keep track of credit card usage and your FICO Score.

Please leave a comment on this post if you have any further questions. 

How FICO Can Help You Manage Credit Card Risk and Performance:

Leanne Marshall