The average balance on U.S. bankcards has grown over the past year, as has the pace of customers entering delinquency, according to a new report by credit scoring services firm FICO. The average balance on a U.S. bankcard was $2,573 in June, a 6.5% increase from one year ago. At the same time, the percentage of accounts that are one cycle past due has grown by 42.6% in the past two years while the percentage of balances that are one cycle past due has grown by 28.3%.
“Pressures from rising balances and inflated interest rates are leading to higher past due rates across the U.S. bankcard industry,” FICO Senior Consultant Leanne Marshall wrote in a blog post on the new figures. “Customers are entering delinquency at a faster pace over the past two years and rolling these increased levels of debt through collections buckets, leading to increased losses for issuers.”
The data indicates that consumer behavior “has been in a downward spiral,” Marshall added. “Increased card usage and lower payment amounts will need to be monitored closely by risk managers so lending strategies are updated accordingly.”
