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<br />The Indian <keyword id="22196321" type="General" weightage="20" keywordseo="credit-card-industry" source="keywords">credit card industry</keyword> is struggling to grow, as new issues slow down on a year-on-year (YoY) basis. Not only has the growth i.e. issuance of new credit cards slowed down, but lenders are also becoming increasingly cautious of the asset qualities, a recent report by Nomura showed. <br /><br />From 19% in July 2024, the growth in the <keyword id="6368202" type="General" weightage="20" keywordseo="credit-card" source="Orion">credit card</keyword> spendings came down to 13% in August 2024. The year-to-date (YTD) growth has also significantly declined in FY25, currently standing at 17%, markedly down from 28% in FY24. For the fifth consecutive month, the number of new credit cards added to the system remained well below the 1-million, or 10 lakh mark. Around 9.2 lakh credit cards were added during the month, a slight uptick from the 7.55 lakh cards that came into the system In July 2024. <br /><br />However, there is growth in this space nevertheless, with about 10.55 crore active credit cards at present, marking a 15.6% YoY increase. Even the annualised spend per card, or the average amount spent via an annual card during an year grew 1% YoY to Rs 1.87 lakh. But this was far less than the 7% growth annual spends via one credit card saw in FY24.<br /><br />Meanwhile, what continues to burgeon consistently is the outstanding amount on these credit cards, which ballooned to Rs 2.7 lakh crore in June 2024, up from Rs 2.6 lakh crore in March 2024, and around Rs 2 lakh crore in the year ago period. To put this in perspective, pre-pandemic, the total outstanding amount stood at Rs 87,686 crore, which marks a 24% CAGR in this amount, in just a span of 5 years. <br /><br /><h2>Large drops, slowdown to sustain</h2>Even the monthly expenditure per card dropped 2% YoY to Rs 16,000 in August, 2024. Subsequently, the transaction volume via credit cards also dipped to 1.6% in August, along with the total amount of <keyword id="21084888" type="General" weightage="100" keywordseo="credit-card-spending" source="keywords">credit card spending</keyword>, which fell to Rs 1.69 lakh crore in August, from Rs 1.73 lakh crore in July. <br /><br />Also, there has been a hefty cutdown in provisions made for credit card reward points, which reflects in the quantum of credit card benefits that have been mowed out by companies of late, making credit cards far less lucrative than before. <br /><br /><h2>HDFC takes lead<br /></h2>During August 2024, <keyword id="19895995" type="General" weightage="20" keywordseo="HDFC-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="HDFC Bank" meta.hostid="261" meta.entityid="HDFC Bank">HDFC bank</keyword> added a total of 2.41 lakh credit cards, taking its total tally of active credit cards to 2.19 crore. <keyword id="19900482" type="General" weightage="20" keywordseo="ICICI-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="ICICI Bank" meta.hostid="261" meta.entityid="ICICI Bank">ICICI Bank</keyword> came a second distant, adding 1.45 lakh credit cards during the month, which means that the second-largest credit card issuer now holds over 1.75 crore active credit cards.<br /><br /> Axis Bank and SBI Cards also added 1.27 lakh and 1.1 lakh cards, respectively to their repertoire during the month, while the growth numbers at Kotak Mahindra Bank remained largely flat, stagnating the bank's total card tally at 54.13 lakh. This was due to the ongoing ban on the bank due to its weak IT infrastructural issues imposed by RBI in April 2024. If anything, the bank's number of credit cards declined by 61,191 during the month. <br /><br />Even as the festive season approaches, experts think that it is unlikely to make a major dent in credit card spendings, which are expected to see a further slowdown in the quarters to come. <br />

Credit card growth experiencing a slowdown, as borrowers struggle to pay back loans

(Eds: Adding info) <p>Mumbai, May 17 () RBL Bank, which derives 18 per cent of its loan portfolio from credit cards, is expecting new plastic issuances to halve and a fall in spends as well in FY21, but is confident of the overall revenues from the segment remaining intact, a senior official has said.</p><p>However, the economic climate will result in an increase in credit costs, or money being set aside for possible loan losses, by over 30 per cent in the cards segment, the official told .</p><p>Usually, banks have a lower reliance on the credit cards segment for their advances because it is an unsecured product, but its Segmental head Harjeet Toor said the bank has been using a slew of analytics capabilities to grow in the category without increasing its delinquencies.</p><p>He explained that revenues will be stable largely on the back of the three month moratorium in loan repayments announced by the RBI, as interests keep getting compounded for the non-payees, adding to its overall income.</p><p>Nearly a fourth of its overall credit card portfolio of Rs 10,500 crore has opted for the moratorium, he said.</p><p>"Our revenues are split evenly between fees and interest income. What we will lose on fees like lower spends, cross-sella and penalty for delayed payments, we will recover through an increase in interest. We expect revenues to be stable," he said.</p><p>According to an investor presentation, in FY20, fees from credit cards contributed Rs 942.3 crore, accounting for 54 per cent of the overall core fee income, which suggests that overall revenues from the credit card to be in the vicinity of Rs 1,900 crore.</p><p>As a prudential measure, the bank locks up the ability to use the cards for newer spends in cases of those customers who have opted for the moratorium, Toor said, adding that only 13 per cent of the customers by number have opted for the RBI-announced relief and sounded confident of it to come down even if the moratorium is extended.</p><p>In FY21, it expects to sell only over 5 lakh credit cards as against the 13 lakh earlier, Toor said, adding that it has to wait for a few months before the market actually settles down.</p><p>In April, there was negligible new acquisitions and the overall portfolio remained at 28 lakh cards, he said, adding that it will be slow in expanding the base at least till the post-monsoon festivities.</p><p>With over 60 per cent of its customers being a resident of the 'red zones', spends have also taken a hit, Toor said, pointing out that spends on aspects like groceries and utilities have held on.</p><p>In FY21, the bank expects a 12 per cent dip in overall spends, through which it derives an interchange fee, as per the investor presentation.</p><p>Toor said the reduction in spends will not be very pronounced because the bank does not depend on discretionary spending categories like restaurants and cinema which are likely to be affected more.</p><p>Uptick in spends will be seen as and when the lockdown eases, he said, adding that operating leverage will be a key driver of profitability.</p><p>From a portfolio quality perspective, he said the credit costs will be up by 30-60 per cent due to the overall climate, but added that it has been using a host of levers to reduce it delinquencies.</p><p>Its overall gross non performing assets from the cards business reduced to 1.2 per cent in March as against 1.67 per cent, he said, adding that its delinquencies are 27 per cent lower than peers.</p>It uses strategies like age group, where it focuses on those above 30, tie-ups with brands like Bajaj Finance and Zomato to give it data analytics, and also avoiding fresh to credit card segment people to keep the NPAs under check, he said. AA BAL

RBL Bank: Credit card revenues to be stable in FY21; cards growth to dip

<p><span style="font-weight: 400;"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Getty Images Latam</span></p><p class="caption">Netflix CEO Reed Hastings</p></div><p></p></div></div>On Wednesday, Netflix </span><a href="http://www.businessinsider.com/netflix-just-blamed-poor-us-subscriber-growth-on-those-new-chips-in-credit-cards-2015-10"><span style="font-weight: 400;">blamed its poor subscriber growth</span></a><span style="font-weight: 400;"> on an unlikely source: the new chip-based credit cards rolling out in the US.</span></p><p><span style="font-weight: 400;">But now some credit card experts are saying that explanation is a bit too convenient, </span><a href="http://www.bloomberg.com/news/articles/2015-10-15/netflix-blaming-new-chip-cards-for-slowdown-seen-as-bogeyman-"><span style="font-weight: 400;">according to Bloomberg</span></a><span style="font-weight: 400;">.</span></p><p><span style="font-weight: 400;">"Netflix is using [the new cards] as a whipping boy for their customer attrition," Julie Conroy, a payments analyst at Aite Group, </span><a href="http://www.bloomberg.com/news/articles/2015-10-15/netflix-blaming-new-chip-cards-for-slowdown-seen-as-bogeyman-"><span style="font-weight: 400;">told Bloomberg</span></a><span style="font-weight: 400;">.</span></p><p><span style="font-weight: 400;">Netflix told Business Insider that those new credit cards often have a new number or expiration date, requiring subscribers to update their payment information online in order for their subscription to continue. And some customers accidentally let their subscriptions lapse.</span></p><p><span style="font-weight: 400;">Netflix CEO Reed Hastings characterized this as "involuntary churn." But Conroy doesn't buy it. </span></p><p><span style="font-weight: 400;">"I don't think a significant customer churn could be blamed on the chip migration," </span><a href="http://www.bloomberg.com/news/articles/2015-10-15/netflix-blaming-new-chip-cards-for-slowdown-seen-as-bogeyman-"><span style="font-weight: 400;">she said to Bloomberg</span></a><span style="font-weight: 400;">.</span></p><p><span style="font-weight: 400;">David Robertson, the head of card research at Nilson Report, agrees. "It seems like they are grasping for a bogeyman here," </span><a href="http://www.bloomberg.com/news/articles/2015-10-15/netflix-blaming-new-chip-cards-for-slowdown-seen-as-bogeyman-"><span style="font-weight: 400;">he told Bloomberg</span></a><span style="font-weight: 400;">. He went on to say that most credit card companies would not change account details, like card numbers, when switching over to the new technology. This runs in direct contrast to Netflix's explanation.</span></p><p><span style="font-weight: 400;">Netflix said the new credit-card rollout was only a third of the way completed, though it wouldn't affect Netflix for much longer. </span><span style="font-weight: 400;">"We'll be through it in a couple months," Hastings assured shareholders. "Next year, everyone will have chip-based cards."</span></p><p><span style="font-weight: 400;">But if these analysts are correct, the end of the rollout won't boost US subscriber numbers. </span></p><p><span style="font-weight: 400;">Netflix gained 880,000 US subscribers during the third quarter, </span><a href="http://www.businessinsider.com/netflix-just-blamed-poor-us-subscriber-growth-on-those-new-chips-in-credit-cards-2015-10"><span style="font-weight: 400;">lower than expected by analysts</span></a><span style="font-weight: 400;">. Wall Street expected domestic subscriber growth to be around 1.25 million.</span></p><p>Business Insider has reached out to Netflix for comment and will update this post when we hear back.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/rich-middle-eastern-countries-not-letting-in-syrian-refugees-2015-9">5 of the richest countries on Earth are in the Middle East, and they won't take any refugees from their war-torn neighbors</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="AzNmhudzoJf3uw_RynKyAv8qXglf1Ng-" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Netflix's explanation for poor growth is just smoke and mirrors, according to credit card experts

<ul><li><strong>The shares of India’s second largest credit card issuer are down by over 33% since listing. <br /><br /></strong></li><li><strong>There is growing fear of default by those with credit card debt in India as coronavirus lockdown has brought business to a standstill and threatens large-scale unemployment.<br /><br /></strong></li><li><strong>However, it is backed by the country’s largest bank, which is owned by the government.<br /><br /></strong></li><li><strong>There is headroom for long-term growth as there are only 4 credit cards for every 100 persons in India. <br /></strong></li></ul>The over 15% fall in SBI Cards and Payments Services share price on Monday (April 13) has taken the stock to ₹505⁠— over 33% below the issue price of ₹755 a piece. Essentially, ₹10,000 invested in SBI Cards during the IPO is worth ₹6,700 now⁠, about a month after it got listed in the stock markets.<br /><br />The lockdown to contain the spread of Covid-19 novel coronavirus has brought business to a standstill and <a href="https://www.businessinsider.in/careers/news/over-136-million-jobs-are-at-risk-due-to-corona-lockdown-here-are-the-worst-hit-sectors/articleshow/74941658.cms" data-type="tilCustomLink" target="_blank">threatens large-scale unemployment</a>. Investors fear that this may lead to defaults by credit card owners and therefore, SBI Cards, India’s second largest credit card issuer is being dumped in the stock market.<br /><br />    <div type="Article" hostid="261" msid="74907443" title="Top Indian banks with the biggest chunks of loans to individual borrowers⁠— and coronavirus has triggered a huge risk" mstype="2" mssubtype="0"></div><br /><br />    <div type="image" title="sbi cards" msid="75126478" hostid="261" caption="&amp;lt;p&amp;gt;SBI Cards share price has lost 33% of its value since its listing last month.&amp;lt;/p&amp;gt;"></div><br />Just about a month ago, before the coronavirus pandemic engulfed the world, the prospects seemed very robust for SBI Cards. And that was one of the reasons why some of the biggest mutual fund houses bet big money on the company in March 2020. <br /><br /><table style="width: 270pt;"> </colgroup>  <tbody><tr> <td class="xl65" style="height:15.0pt;width:154pt"><strong>Mutual Fund House</strong></td> <td class="xl66" style="border-left-width: initial; border-left-style: none; width: 116pt;"><strong>Investment in SBI Cards in March 2020</strong></td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">Aditya Birla Sunlife</td> <td class="xl68" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹134 crore</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">Axis </td> <td class="xl68" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹161 crore</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">Edelweiss</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹44 crore</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">HDFC</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹666 crore</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">Kotak</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹169 crore</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">Mirae</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹117 crore</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">Tata</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹81 crorre</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">LIC</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹57 crore</td> </tr> <tr> <td class="xl67" style="height: 15pt; border-top-width: initial; border-top-style: none;">DSP </td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹25 crore</td> </tr> <tr> <td class="xl70" style="height: 15.75pt; border-top-width: initial; border-top-style: none;">IDFC</td> <td class="xl71" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹17 crore</td> </tr></tbody></table><em>*Source: Edelweiss</em><br /><br />Firsty, it is backed by the country’s largest bank, which is owned by the government.<br /><br />Secondly, there is a huge headroom for long-term growth as there are only 4 credit cards for every 100 persons in India. That’s an abysmally low and the penetration level can only go up from here. <br /><br />    <div type="image" title="credit card penetration in india (1)." msid="75126551" hostid="261" caption="&amp;lt;p&amp;gt;There is a huge headroom for long-term growth as there are only 4 credit cards for every 100 persons in India. &amp;lt;/p&amp;gt;"></div><br />It is expected that the total credit card spend in india would exceed ₹15 lakh crore (over $200 billion) in the next five years. And SBI Cards can corner a huge chunk of this market waiting to explode.<br /><br />    <div type="Article" hostid="261" msid="74656454" title="SBI Cards lists on the worst possible day and its stock slips 13% on debut" mstype="2" mssubtype="0"></div><br /><strong>Competition </strong><br /><br />India’s credit card market is controlled by four companies⁠— HDFC Bank, SBI Cards, ICICI Bank, and Axis Bank in the descending order of market share⁠— who together control two-thirds of all credit card debt.<br /><br />    <div type="image" title="india credit card market share (1)." msid="75126578" hostid="261" caption="&amp;lt;p&amp;gt;SBI Cards is India&amp;#39;s second largest credit card issuer after HDFC Bank.&amp;lt;/p&amp;gt;"></div><br /><strong>Policies enabling credit card usage<br /></strong><br />The Narendra Modi government has been in favour of non-cash transactions and that is a big advantage for companies like SBI Cards. “Specially e-commerce industry has helped the growth of credit card usage and spending in India which is expected to grow in near future will boost the growth of credit cards as well,” a report from KR Choksey Securities explained.<br /><br />    <div type="image" title="digital payments." msid="75126590" hostid="261" caption="&amp;lt;p&amp;gt;&amp;lt;span&amp;gt;&amp;lt;/span&amp;gt;&amp;lt;span&amp;gt;The Indian government has been in favour of non-cash transactions and that is a big advantage for companies like SBI Cards. &amp;lt;/span&amp;gt;&amp;lt;/p&amp;gt;"></div><br /><br />SEE ALSO:<br /><a href="https://www.businessinsider.in/business/news/country-sees-101-ipos-in-mar-quarter-median-deal-size-just-usd-1-mn/articleshow/74830032.cms" data-type="tilCustomLink" target="_blank">India sees 10 IPOs between Jan and March 2020</a><br /><br /><a href="https://www.businessinsider.in/finance/news/how-to-avail-three-month-moratorium-for-sbi-emi-and-credit-cards/articleshow/74945199.cms" data-type="tilCustomLink" target="_blank">How to avail three-month moratorium for SBI EMI and credit cards</a><br /><br /><a href="https://www.businessinsider.in/finance/news/how-to-register-online-for-sbi-internet-banking-using-atm-card/articleshow/75004937.cms" data-type="tilCustomLink" target="_blank">How to register online for SBI internet banking using ATM card</a><br /><br /><br />

₹10,000 invested in SBI Cards during IPO is worth about ₹6,700 now⁠— here’s why

<ul class="summary-list"><li><span>This is an excerpt from a story delivered exclusively to Business Insider Intelligence Payments &amp; Commerce subscribers. </span></li><li><span>To receive the full story plus other insights each morning, <a href="https://www.businessinsider.com/intelligence?IR=T&amp;itm_source=businessinsider&amp;itm_medium=content_marketing&amp;itm_campaign=briefing_post&amp;itm_content=top_text&amp;itm_term=bundle_subscription_text_link-q2-reveals-issuing-banks-improve-credit-card-sales-2019-7">click here.</a></span></li></ul><p>Issuing banks' Q2 earnings revealed small improvements in credit card spend:</p><p><div class="KonaFilter image-container display-table float_right no-rightrail"><div><div class="image"></div></div></div></p><ul><li>JPMorgan Chase <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuanBtb3JnYW5jaGFzZS5jb20vY29ycG9yYXRlL2ludmVzdG9yLXJlbGF0aW9ucy9kb2N1bWVudC8xMWViNzE2Yy0yNzdjLTk0OGEtODY3My1kMGU5NmI1YzY3ODkucGRm/5d233c18f730436f2414784fBcaeca3fe" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuanBtb3JnYW5jaGFzZS5jb20vY29ycG9yYXRlL2ludmVzdG9yLXJlbGF0aW9ucy9kb2N1bWVudC8xMWViNzE2Yy0yNzdjLTk0OGEtODY3My1kMGU5NmI1YzY3ODkucGRm/5d233c18f730436f2414784fBcaeca3fe&amp;source=gmail&amp;ust=1563539510133000&amp;usg=AFQjCNFWKzuCmHYQ__-bHRIrqIfw345Fmw">reported</a> its noncommercial credit card sales volume grew 10.6% year-over-year (YoY) to reach $192.5 billion. This performance is a slight improvement from <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuanBtb3JnYW5jaGFzZS5jb20vY29ycG9yYXRlL2ludmVzdG9yLXJlbGF0aW9ucy9kb2N1bWVudC8wYmM2Zjk2NS04MGUyLTRkYTktOGIyNC1mMjc0NDQxZmYzZjEucGRm/5d233c18f730436f2414784fBe2f59eba" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuanBtb3JnYW5jaGFzZS5jb20vY29ycG9yYXRlL2ludmVzdG9yLXJlbGF0aW9ucy9kb2N1bWVudC8wYmM2Zjk2NS04MGUyLTRkYTktOGIyNC1mMjc0NDQxZmYzZjEucGRm/5d233c18f730436f2414784fBe2f59eba&amp;source=gmail&amp;ust=1563539510133000&amp;usg=AFQjCNG1bxh8JQwb576QURTF8Xi1OYimwA">Q1 2019</a>, when the segment rose 9.8% YoY, and a minor deceleration compared with its 11% YoY growth in <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuanBtb3JnYW5jaGFzZS5jb20vY29ycG9yYXRlL2ludmVzdG9yLXJlbGF0aW9ucy9kb2N1bWVudC8yNmNmMmJlMC00M2Y0LTQyZDMtYmMyNi1jMmE4NjZmOGEucGRm/5d233c18f730436f2414784fBb6b58be5" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuanBtb3JnYW5jaGFzZS5jb20vY29ycG9yYXRlL2ludmVzdG9yLXJlbGF0aW9ucy9kb2N1bWVudC8yNmNmMmJlMC00M2Y0LTQyZDMtYmMyNi1jMmE4NjZmOGEucGRm/5d233c18f730436f2414784fBb6b58be5&amp;source=gmail&amp;ust=1563539510133000&amp;usg=AFQjCNGM3Z3Hz4HCy-CzhUNsI5wwQkIY5g">Q2 2018</a>.</li><li>Wells Fargo <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cwOC53ZWxsc2ZhcmdvbWVkaWEuY29tL2Fzc2V0cy9wZGYvYWJvdXQvaW52ZXN0b3ItcmVsYXRpb25zL2Vhcm5pbmdzL3NlY29uZC1xdWFydGVyLTIwMTktZWFybmluZ3Mtc3VwcGxlbWVudC5wZGY/5d233c18f730436f2414784fB4c407f4f" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cwOC53ZWxsc2ZhcmdvbWVkaWEuY29tL2Fzc2V0cy9wZGYvYWJvdXQvaW52ZXN0b3ItcmVsYXRpb25zL2Vhcm5pbmdzL3NlY29uZC1xdWFydGVyLTIwMTktZWFybmluZ3Mtc3VwcGxlbWVudC5wZGY/5d233c18f730436f2414784fB4c407f4f&amp;source=gmail&amp;ust=1563539510133000&amp;usg=AFQjCNE371UwNv65yPacqtCGLrqNHhW9EQ">announced</a> that its consumer card portfolio's purchase volume totaled $22.5 billion, increasing 5.7% YoY. Its growth represents a minor acceleration from the prior quarter, when its purchase volume rose just 5.0% YoY, but it did dip relative to the 6.2% YoY growth it <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cud2VsbHNmYXJnby5jb20vYWJvdXQvaW52ZXN0b3ItcmVsYXRpb25zL3F1YXJ0ZXJseS1lYXJuaW5ncy8/5d233c18f730436f2414784fB04593c11" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cud2VsbHNmYXJnby5jb20vYWJvdXQvaW52ZXN0b3ItcmVsYXRpb25zL3F1YXJ0ZXJseS1lYXJuaW5ncy8/5d233c18f730436f2414784fB04593c11&amp;source=gmail&amp;ust=1563539510133000&amp;usg=AFQjCNHWRSkplkK0gkkBVgjUTRc7p6nk9A">posted</a> in Q2 2018.</li><li>As we <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L3hvb20tZXh0ZW5kcy10by0zMi1tYXJrZXRzLWluLWV1cm9wZS1jaXRpcy1icmFuZGVkLWNhcmRzLWJvdW5jZS1iYWNrLWluLXEyLTIwMTktdGhlcmUtbWF5LWJlLTEyMDAwLXVzLXN0b3JlLWNsb3N1cmVzLWluLTIwMTktMjAxOS03/5d233c18f730436f2414784fBc389ce1f" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L3hvb20tZXh0ZW5kcy10by0zMi1tYXJrZXRzLWluLWV1cm9wZS1jaXRpcy1icmFuZGVkLWNhcmRzLWJvdW5jZS1iYWNrLWluLXEyLTIwMTktdGhlcmUtbWF5LWJlLTEyMDAwLXVzLXN0b3JlLWNsb3N1cmVzLWluLTIwMTktMjAxOS03/5d233c18f730436f2414784fBc389ce1f&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNEfxmw4NiQsdM-GxmQTW_nWQ8fGoA">noted</a> yesterday, Citi's branded card purchase sales <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuY2l0aWdyb3VwLmNvbS9jaXRpL2ludmVzdG9yL2RhdGEvcDE5MDcxNWEucGRmP2llTm9jYWNoZT05MDc/5d233c18f730436f2414784fBb562d9b1" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuY2l0aWdyb3VwLmNvbS9jaXRpL2ludmVzdG9yL2RhdGEvcDE5MDcxNWEucGRmP2llTm9jYWNoZT05MDc/5d233c18f730436f2414784fBb562d9b1&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNGzqTjBgLBzJN1gYrfx27R-5Rsdeg">reached</a> $93 million, jumping 8% YoY. Like the other issuers, this performance was a small improvement on its growth from Q1 2019, when the segment rose 6% YoY, but it actually surpassed its growth from the comparable quarter a year ago, when the metric <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuY2l0aWdyb3VwLmNvbS9jaXRpL2ludmVzdG9yL2RhdGEvcDE4MDcxM2EucGRmP2llTm9jYWNoZT02MzY/5d233c18f730436f2414784fBb088b5b8" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuY2l0aWdyb3VwLmNvbS9jaXRpL2ludmVzdG9yL2RhdGEvcDE4MDcxM2EucGRmP2llTm9jYWNoZT02MzY/5d233c18f730436f2414784fBb088b5b8&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNHd7iwMTRI-AwwKKkp8XAwKswX_Tg">increased</a> 7% YoY.</li></ul><p>Issuers' small improvements in credit card sales volume line up with US retail's performance, which is also making small steps in the right direction. In June, US retail sales <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuY2Vuc3VzLmdvdi9yZXRhaWwvbWFydHMvd3d3L21hcnRzX2N1cnJlbnQucGRm/5d233c18f730436f2414784fB71597803" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cuY2Vuc3VzLmdvdi9yZXRhaWwvbWFydHMvd3d3L21hcnRzX2N1cnJlbnQucGRm/5d233c18f730436f2414784fB71597803&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNFSJD97nnGj-ABXXEZdq-sVAV4cmA">rose</a> 3.4% YoY after May's grew 2.9% YoY. This acceleration is a positive for the industry, but it pales in comparison to the 5.9% YoY growth it encountered in <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L2dvb2dsZS1pbnZlc3RzLTU1MC1taWxsaW9uLWluLWpkY29tLWxvcmFsLWxhdW5jaGluZy1hci1hZHZpc29yLXNlcnZpY2UtdXMtcmV0YWlsLXNhbGVzLWdyb3d0aC1oaXRzLW5ldy0yMDE4LWhpZ2gtaW4tbWF5LTIwMTgtNg/5d233c18f730436f2414784fB07319270" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L2dvb2dsZS1pbnZlc3RzLTU1MC1taWxsaW9uLWluLWpkY29tLWxvcmFsLWxhdW5jaGluZy1hci1hZHZpc29yLXNlcnZpY2UtdXMtcmV0YWlsLXNhbGVzLWdyb3d0aC1oaXRzLW5ldy0yMDE4LWhpZ2gtaW4tbWF5LTIwMTgtNg/5d233c18f730436f2414784fB07319270&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNFbOKTFNHfFQwK4_gNH2rE3q_xu4w">May 2018</a>, for example.</p><p>Credit card spend is somewhat correlated to overall retail sales because credit cards made up <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L2RlYml0LWZpbmFsbHktYmVhdC1jYXNoLWFzLXVzLWNvbnN1bWVycy1mYXZvcml0ZS1wYXltZW50LW1ldGhvZC1oZXJlcy1ob3ctY2FyZC1pc3N1ZXJzLWNhbi1wdWxsLXRoZW0tZXZlbi1mdXJ0aGVyLWF3YXktZnJvbS1jYXNoLTIwMTktNw/5d233c18f730436f2414784fB8301e121" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L2RlYml0LWZpbmFsbHktYmVhdC1jYXNoLWFzLXVzLWNvbnN1bWVycy1mYXZvcml0ZS1wYXltZW50LW1ldGhvZC1oZXJlcy1ob3ctY2FyZC1pc3N1ZXJzLWNhbi1wdWxsLXRoZW0tZXZlbi1mdXJ0aGVyLWF3YXktZnJvbS1jYXNoLTIwMTktNw/5d233c18f730436f2414784fB8301e121&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNHsHQyumqE1LBkY1-dKEvI_lG_1cg">23%</a> of US adults' transactions in 2018, making them the third-most-popular payment method behind only cash and debit. And with the US-China trade war continuing - and <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L3dhbG1hcnQtdXNpbmctYWktY2FtZXJhcy10by1maWdodC10aGVmdC1hbGliYWJhLWFuZC1qZGNvbS1wcm92aWRpbmctbWVyY2hhbnRzLXdpdGgtZGF0YS1ucmYtc2F5cy1uZXctdGFyaWZmcy13aWxsLWh1cnQtY29uc3VtcHRpb24tMjAxOS02/5d233c18f730436f2414784fB52cdb2ce" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly9pbnRlbGxpZ2VuY2UuYnVzaW5lc3NpbnNpZGVyLmNvbS9wb3N0L3dhbG1hcnQtdXNpbmctYWktY2FtZXJhcy10by1maWdodC10aGVmdC1hbGliYWJhLWFuZC1qZGNvbS1wcm92aWRpbmctbWVyY2hhbnRzLXdpdGgtZGF0YS1ucmYtc2F5cy1uZXctdGFyaWZmcy13aWxsLWh1cnQtY29uc3VtcHRpb24tMjAxOS02/5d233c18f730436f2414784fB52cdb2ce&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNFresPpIiQN2nnaCgp93yUyMIbkXw">threatening</a> to seriously hurt US consumption - credit card spend could slide along with, or even faster than, retail in the near future.</p><p>Rewards initiatives may be key in boosting credit card spend despite retail's mild improvements, as they can encourage additional purchases. Chase turned in the best YoY performance this quarter among these three issuers, and that may be thanks in part to its exceptional rewards offerings, like those from its Sapphire Reserve card.</p><p>Because 79% of customers cite rewards as the top <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cudHN5cy5jb20vQXNzZXRzL1RTWVMvZG93bmxvYWRzL3JzXzIwMTgtdXMtY29uc3VtZXItcGF5bWVudC1zdHVkeS5wZGY/5d233c18f730436f2414784fB396e6ed1" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cudHN5cy5jb20vQXNzZXRzL1RTWVMvZG93bmxvYWRzL3JzXzIwMTgtdXMtY29uc3VtZXItcGF5bWVudC1zdHVkeS5wZGY/5d233c18f730436f2414784fB396e6ed1&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNEJ41a2lZ1iNwFP0kue9U1HHQJ1TQ">reason</a> they choose one card over another, providing robust perks that touch all kinds of spending could help firms boost top-of-wallet status, in turn maintaining or even reaccelerating card spend relative to trends in overall retail. Maximizing performance within card segments is critical for issuers, which are seeing continually declining returns on credit cards, per <a href="https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cubWVyY2F0b3JhZHZpc29yeWdyb3VwLmNvbS91cGxvYWRlZEZpbGVzLzIwMTglMjBDcmVkaXQlMjBPdXRsb29rLUZJTkFMLnBkZg/5d233c18f730436f2414784fB4ad89bb3" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://e.businessinsider.com/click/17520541.7271/aHR0cHM6Ly93d3cubWVyY2F0b3JhZHZpc29yeWdyb3VwLmNvbS91cGxvYWRlZEZpbGVzLzIwMTglMjBDcmVkaXQlMjBPdXRsb29rLUZJTkFMLnBkZg/5d233c18f730436f2414784fB4ad89bb3&amp;source=gmail&amp;ust=1563539510134000&amp;usg=AFQjCNG6A92JAQti74LIDgcnnj0fOxGTjQ">Mercator</a>.</p><p>Hunting for cost-effective ways to entice customers to not only sign up, but keep cards top-of-wallet as credit cards continue to become more popular spending instruments, should be core to issuers' strategies.</p><p><em><strong>Interested in getting the full story? 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As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. &gt;&gt; <strong><a href="https://www.businessinsider.com/intelligence?IR=T&amp;itm_source=businessinsider&amp;itm_medium=content_marketing&amp;itm_campaign=briefing_post&amp;itm_content=learn_more_text&amp;itm_term=bundle_subscription_text_link-q2-reveals-issuing-banks-improve-credit-card-sales-2019-7">Learn More Now</a></strong></li><li>Current subscribers can read the full briefing <strong><a href="https://intelligence.businessinsider.com/post/issuing-banks-need-to-boost-rewards-to-better-credit-card-spend-visa-delves-into-integrated-payments-lg-pays-us-launch-wont-make-a-splash-2019-7">here.</a></strong></li></ol><p class="tagline"><a href="https://www.businessinsider.com/intelligence/future-of-fintech?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_leadgen&amp;itm_content=finance&amp;itm_campaign=future-of-fintech"></a></p>

Issuing banks need to boost rewards to better their credit card spend

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>AP Images</span></p></div><p></p></div></div>Netflix is blaming disappointing US subscriber growth on the transition to chip-based credit and debit cards.</p><p>In a <a href="http://ir.netflix.com/">letter to shareholders</a>, Netflix said its forecast for the third quarter was off due to higher-than-expected "involuntary churn" because of the transition in the US to a different credit card technology.</p><p>Basically, people didn't update their credit card information on Netflix, and let their accounts expire.</p><p>Netflix gained 880,000 US subscribers during the third quarter, lower than expected by analysts. Wall Street expected domestic subscriber growth to be around 1.25 million, according to an average <a href="http://www.bloomberg.com/news/articles/2015-10-14/netflix-subscriber-growth-stunted-by-chip-based-credit-cards">compiled by Bloomberg</a>.</p><p class="p1"><span class="s1">Netflix says that in terms of net additions to its US subscriber base, through the first nine months of 2015, it is "slightly ahead of prior year." Netflix expects to finish 2015 at around the same level as 2014.</span></p><p class="p1"><span class="s1"> </span><span class="s1">"This would mark the 4th consecutive year we've added about 6 million members in the US," the letter says. </span>Netflix stock <a href="http://www.businessinsider.com/netflix-q3-earnings-october-14-2015-10">plunged after market close</a>.</p><p class="p1">International subscriber growth, however, was above estimates. In the international arena, Netflix's subscription base grew <span>by 2.74 million, well above the 2.45 million predicted by analysts, <a href="http://www.bloomberg.com/news/articles/2015-10-14/netflix-subscriber-growth-stunted-by-chip-based-credit-cards">according to Bloomberg</a>.</span></p><p><em>Developing...</em></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/inside-the-insane-life-of-sean-parker-napster-facebook-2015-8">Inside the insane life of Facebook billionaire Sean Parker</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="djYXZ4djo8F4ptbDwldBI28l1PG-kk1B" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Netflix just blamed poor US subscriber growth on those new chips in credit cards

<ul class="summary-list"><li>US credit card debt hit $1 trillion for the first time ever this year.</li><li>That's actually not excessive when considering factors like wage growth, experts told Insider.</li></ul><p>America's collective credit card bill has never been higher — but despite the eye-popping dollar amount, the consumer debt situation isn't as bad as it seems, experts told Insider.</p><p><a href="https://www.businessinsider.com/consumer-credit-card-debt-tops-1-trillion-first-time-ever-2023-8">The $1 trillion milestone for US credit card debt</a> was met with concern from commentators earlier this year, who feared that Americans' spending habits are becoming unsustainable, especially amid dwindling pandemic savings and an uncertain economic outlook.  </p><p>To be sure, $1 trillion is a lot, but that figure needs to be examined in the context of other factors, like income and wealth, economists say. And with those considerations, the hefty credit card balance in the US actually isn't much of a problem. </p><p>"In aggregate, I think consumers are in good shape and they have not overborrowed," Mark Zandi, the chief economist of Moody's Analytics, told Insider. "Low-income households, less true. They've been more stretched and having more difficulty. But in aggregate, consumers are in a pretty good spot."</p><p>That could spell good news for the economy, as Wall Street forecasters have warned that the <a href="https://www.businessinsider.com/us-economy-resilient-consumer-spending-may-not-last-bloomberg-survey-2023-9?inline-endstory-related-recommendations=&amp;_gl=1*1pfab8m*_ga*MjMxMzA1Mzg2LjE2NTY0NDQxNTU.*_ga_E21CV80ZCZ*MTY5NTMxOTYyOC42NjAuMS4xNjk1MzIxOTkxLjUzLjAuMA..">weakening American consumer</a> could pose a huge vulnerability to economic growth. <a href="https://www.businessinsider.com/us-households-on-brink-household-savings-dry-up-september-fed-2023-9">Americans are set run out of their excess savings</a> by the end of this quarter, according to the San Francisco Fed – an event some analysts have said <a href="https://markets.businessinsider.com/news/stocks/recession-outlook-us-economy-growth-slowdown-savings-investment-interest-rates-2023-4">could raise the risk of a recession</a>.</p><p>But there are five signs those concerns are misplaced – and <a href="https://markets.businessinsider.com/news/stocks/economy-no-recession-consumer-spending-strong-stock-market-outlook-debt-2023-7">consumers and the economy are doing just fine</a>.</p><h3>1. Spending growth has remained stable, despite blowing past the $1 trillion milestone</h3><p>The nominal figures behind the total credit card balance are misleading, especially when you adjust for inflation. Real consumer spending growth has actually stayed stable at around 2% for the past few years, Zandi said. That's a healthy pace – strong enough to sustain economic growth this year, but not so strong as to overheat the economy and stoke higher inflation.</p><p>"I think  consumer spending has been exactly where it needs to be," Zandi told Insider. "It's actually quite incredible how consumers have calibrated their spending. Not too much, not too little, just right, exactly what you want to see."</p><h3>2. Credit card utilization is low</h3><p>Credit use is actually fairly modest in the grand scheme of things, Zandi says.</p><p>According to Michele Raneri, the vice president of financial services research at Transunion, credit card utilization has stayed around 22%. That's a fairly sustainable ratio, as it means Americans have room to tack on more to the credit lines should an unexpected emergency come up. </p><p>"And even more recently, they've started to pull back in significant part because they don't need the cash as much as they did a year ago because inflation has declined and wage growth is stronger than inflation," Zandi added.</p><p>Americans' real incomes are also rising, Zandi said, which can help consumers build wealth and slow down their credit usage. <a href="https://www.bls.gov/news.release/realer.nr0.htm">Real hourly wage growth accelerated 0.5%</a> year-over-year during the month of August, the Bureau of Labor Statistics reported.</p><h3>3. Some of the debt is being fueled by first-time credit card holders</h3><p><a href="https://www.businessinsider.com/gen-z-rack-up-credit-card-debt-faster-millennials-genx-2023-3">GenZ is a big contributor to the latest surge in credit card debt</a> – which is normal, Raneri said, since that generation is at the age where many are starting to get access to credit for the first time. Gen Zers are also not high-income earners – so it makes sense that they're making more use of credit cards, which helps young consumers stretch their spending and keep up with the pace of inflation, she added.</p><p>Total balances on credit cards held by Gen Z were up 52% to $55 billion over the past year, according to second quarter TransUnion data, though total balances across all US card holders was up just 17% to $963 billion. <a href="https://www.bls.gov/news.release/realer.nr0.htm" target="_blank" rel="noopener">That's the fastest credit growth rate of growth out of any generation,</a> with Gen Zers contributing around 17% of all new US consumer debt added over the past year.</p><h3><strong style="color: #000000;">4. Americans are cushioned with tons of equity</strong></h3><p>Though some lower-income consumers are in danger of defaulting or slipping into delinquency on their credit card debt, Americans are shored up with tons of equity, Raneri said, mainly in the form of rapidly appreciation home values. In fact, LendingTree noted this summer that <a href="https://markets.businessinsider.com/news/commodities/housing-market-homeowners-equity-trillion-lendingtree-house-prices-value-rates-2023-8">Americans are sitting on a whopping $$28.7 trillion of home equity</a> that can be tapped if needed, and Wells Fargo has said that the huge run up in home prices in recent years could <a href="https://markets.businessinsider.com/news/commodities/housing-market-home-values-consumers-prices-savings-fed-inflation-2023-8?utm_medium=ingest&amp;utm_source=markets">keep consumers afloat in the event of a downturn</a>. </p><p>There are also fewer new loans being issued now compared to more distressed periods like 2008, for instance – which is why Raneri doesn't see any risk of another crisis resulting from consumer debt.</p><p>"There's a cushion there that consumers can still use to absorb as they repay the debt that they've got or straight out what their spending is," she added.</p><h3><strong style="color: #000000;">5. Delinquencies are slowing</strong></h3><p>The delinquency rate on credit card loans rose to just 2.77% over the past quarter, according to <a href="https://fred.stlouisfed.org/series/DRCCLACBS" target="_blank" rel="noopener">Fed data</a>. That's only fractionally higher than the delinquency rate in the second quarter of 2019, before the pandemic, and it's well-below the delinquency rate during the 2008 crisis, which saw credit card delinquencies peak at 6.77%. </p><p>Lenders are also tightening their underwriting standards before doling out cash, Zandi said, which should help the delinquency rate decrease in the future. Already, the delinquency rate on loans issued in 2023 is lower than the delinquency rate on loans issued in 2021 and 2022. That suggests credit card delinquencies will soon peak around the fourth quarter of this year before declining, he estimated.</p><p>In fact, Zandi doesn't see America's spending boom as a problem unless the US has a recession, which could spark job losses and cause delinquencies to rise. But that isn't his expectation over the next year:</p><p>"I think the economy will be resilient enough, in part because consumers are in such good financial shape in aggregate, that we won't suffer a recession between this time and the end of 2024," he said – all good news for the private debt picture.</p><p>Government debt is a different story. The <a href="https://markets.businessinsider.com/news/bonds/treasury-yields-jump-us-debt-hits-record-33-trillion-2023-9#:~:text=US%20national%20debt%20has%20ballooned,its%20policy%20meeting%20on%20Wednesday.">US debt balance just notched $33 trillion</a> for the first time ever, something economists have warned could <a href="https://markets.businessinsider.com/news/bonds/us-debt-economy-outlook-government-spending-deficit-bond-market-treasuries-2023-9">blow up into a bigger problem</a> in the future.</p>

America's $1 trillion credit card bill really isn't as bad as it seems

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Thomson Reuters</span></p><p class="caption">Several credit-card providers say defaults are rising.</p></div><p></p></div></div>Credit-card debt in the US rose in June to surpass the peak set just before the 2008 financial crisis.</p><p>Outstanding revolving credit, which includes credit-card debt, rose to $1.02 trillion in June, according to a monthly <a href="https://www.federalreserve.gov/releases/g19/current/">report</a> from the Federal Reserve released on Monday. </p><p>Missed debt payments have declined from the recession era, when several homes were foreclosed on because their owners got loans they wouldn't have qualified for with tighter rules.</p><p>But defaults are rising again for credit cards and auto loans. The New York Federal Reserve observed a 7.5% rise in the share of credit-card balances that were seriously delinquent in the first quarter, or at least 90 days past due.  </p><p><span>"We simply can't keep taking on credit card debt forever without it causing major problems," said Matt Schulz, the senior analyst at CreditCards.com. "This record probably won't be a major tipping point, but it likely isn't too far off."</span><span><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Andy Kiersz/Business Insider; data from the Federal Reserve" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/5989dc3d76084a30198b4ed1-960/revolving-consumer-credit.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Andy Kiersz/Business Insider; data from the Federal Reserve</span></p></div><p></p></div></div></span>Besides the New York Fed, several credit-card providers are reporting a rise in defaults. Synchrony Financial, one of the largest providers of store cards, said its provisions for loan losses - what it uses to cover for missed payments - jumped 30% year-on-year to $1.33 billion in the second quarter. That was partly because it lent out more dollars.</p><p>At American Express, loan loss provisions rose 26% from last year. And, Capital One said its charge-off rate, or the share of balances it was unable to collect, rose to 5.1% in the second quarter from 4.07% a year earlier.  </p><p>"It's worrisome that we are starting to see delinquency rates now begin to rise even with the unemployment rate at a cycle low," said David Rosenberg, the chief economist at Gluskin Sheff, in a note on Tuesday. </p><p>"This tells me that we are seeing escalating credit strains that have little to do just yet with a weakening economy - evidence that once again, very risky loans were extended this cycle to marginal if not sketchy borrowers."</p><p>Rosenberg said credit growth has run far in excess of work-based wage growth. And, if banks tighten their lending standards, it could reduce the contribution that spending makes to economic growth.</p><p>"<span>This record should serve as a wake-up call to Americans to focus on their credit card debt," Schulz said.</span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/stock-market-new-record-highs-2017-7">Stocks have shrugged off Trump headlines to hit new highs this week</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="IwamkwYzE6NQS76DKxkDlDYPBj612Bff" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Americans hold more credit-card debt than ever

<ul class="summary-list"><li><a href="https://www.businessinsider.com/millennials-have-credit-card-student-loan-mortgage-debt-2019-10">Credit-card debt</a> in America has reached a record high of $930 billion, according to <a href="https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q4.pdf">new Fed Reserve data</a> first <a href="https://www.wsj.com/articles/credit-card-debt-in-u-s-rises-to-record-930-billion-11581442140">reported by the Wall Street Journal</a>.</li><li>Serious credit-card delinquency rates - payments made 90 days or more past due - have also increased, particularly among those ages 18 to 29.</li><li><a href="https://www.businessinsider.com/average-american-millennial-net-worth-student-loan-debt-savings-habits-2019-6">Millennials</a>' difficulty in paying off their credit-card debt reflects their financial reality: an increasing cost of living that outpaces their income growth.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories</a>.</li></ul><p>Americans are running up their <a href="https://www.businessinsider.com/millennials-would-put-student-loan-payments-toward-other-debt-2019-11">credit cards</a>.</p><p>Credit-card debt reached an all-time high after balances increased by $46 billion from the third quarter of 2019 to $930 billion in the fourth quarter - surpassing its pre-recession peak, <a href="https://www.wsj.com/articles/credit-card-debt-in-u-s-rises-to-record-930-billion-11581442140">reported Yuka Hayashi for the Wall Street Journal</a>, citing <a href="https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q4.pdf">new Federal Reserve data</a>.</p><p>The uptick is a double-edged sword, Hayashi wrote: increased spending signals a strong economy, but people are having trouble paying off their shopping habits. </p><p>Serious credit-card delinquency rates, defined as payments made at least 90 days past the due date, increased from 5.16% to 5.32% in the same time frame - the highest in nearly eight years, according to the Fed. Serious-delinquency rates are even higher for those ages 18 to 29, rising past the 2010 record high of 8.91% to 9.36%. A chart breaking down the Fed data shows that a greater percentage of the overall credit-card debt is held by people ages 50 and older.</p><p>That might explain why <a href="https://www.businessinsider.com/half-of-millennials-have-credit-card-debt-2019-10">more than half (67%) of credit-card indebted millennials</a> polled in a 2019 Insider and <a href="https://morningconsult.com/2019/10/10/the-toll-of-student-debt-goes-beyond-failing-to-build-wealth/">Morning Consult</a> survey are experiencing some or a lot of stress about their credit-card debt.</p><h2><strong>Rising living costs are outpacing growth in millennial wages</strong></h2><p>The serious delinquency rates could be reflective of the financial realities millennials are facing, particularly that of an increasing cost of living that outpaces their income growth.</p><p><a href="https://www.businessinsider.com/american-millennials-less-rich-than-other-generations-wealth-reality-2019-4" target="_blank" rel="noopener">Multiple studies show</a> that millennials have less purchasing power than previous generations did at the same age. A <a href="https://studentloanhero.com/featured/millennials-have-better-worse-than-generations-past/">2018 report from Student Loan Hero</a> found that rent, home prices, and college tuition had all increased faster than incomes in the US. The latter is a particularly heavy weight - <a href="https://www.federalreserve.gov/publications/2018-economic-well-being-of-us-households-in-2017-student-loans.htm">62% of adults ages 18 to 29</a> with bachelor's degrees are dealing with student debt.</p><p>It doesn't help that those ages 25 to 34 on average have seen <a href="https://www.businessinsider.com/income-increase-young-adults-less-than-housing-tuition-costs-2019-9">incomes increase by just $29</a> since 1974 when adjusted for inflation, <a href="https://www.supermoney.com/average-millennial-income/">according to a recent SuperMoney report</a> that analyzed US Census Bureau data. That year, they were earning an average of $35,426, versus a mere $35,455 by 2017.</p><p>That's way less than the inflation-adjusted income growth for other age groups in the same time period - $2,900 for adults ages 35 to 44 and nearly $5,400 for those ages 45 to 54.</p><p>When most of a minimal income is put toward rising housing and education costs, it's easy to put daily living costs on a credit card and difficult to pay it off, ultimately spawning an endless cycle of credit-card debt.</p><p>However, Wilbert van der Klaauw, senior vice president at the New York Fed, said he's unsure whether the increase in credit-card delinquency rates is because certain cohorts of the population aren't faring well or because lending standards have become more relaxed, Hayashi reported. The Fed is "looking into" it, he said.</p><p class="tagline"><a href="https://www.businessinsider.com/generation-z?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_hub&amp;itm_content=millennials&amp;itm_campaign=generation-z-2"></a></p>

Americans have more credit-card debt than ever, and millennials are really struggling to pay theirs off

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Tom Williams/Getty</span></p><p class="caption">Michael Corbat, left, CEO of Citigroup, and Jamie Dimon, CEO of JPMorgan Chase, testify during a House Financial Services Committee hearing in Rayburn Building titled "Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis," on Wednesday, April 10, 2019.</p></div><p></p></div></div></p><ul class="summary-list"><li>Citigroup beat earnings expectations for the second quarter, thanks largely to a stand-out performance from its credit-card business. </li><li>Revenue in the North American branded-cards business rose 7% to $2.2 billion in the quarter. </li><li><a href="https://www.businessinsider.com/citi-is-shaking-up-its-consumer-bank-and-a-key-executive-is-out-2018-8">It was a stark reversal f</a>or Citi's credit-card business, which struggled in 2018 and missed growth targets. </li><li>Credit cards could be key to helping Citi defy Wall Street expectations and hit return targets for 2019 and beyond.</li><li><a href="https://www.businessinsider.com/prime?module=article&amp;area=summary" target="_blank" rel="noopener">Click here for more BI Prime stories</a>.</li></ul><p>Citigroup kicked off bank-earnings season by beating second-quarter profit expectations, thanks in large part <a href="https://markets.businessinsider.com/news/stocks/citigroup-2q-earnings-results-beat-estimates-in-second-quarter-2019-7-1028352427">to its consumer bank</a>, which pulled in $8.5 billion in revenue, a 4% uptick from last year.</p><p>The global consumer bank's best second quarter since 2013 was driven largely by a stark change in fortunes for its North American credit-card business, which built on first-quarter momentum and grew revenue 7% to $2.2 billion. </p><p>The credit-card division is also helping drive deposits in the bank's $34 billion consumer division, showing cards may play a pivotal role in Citi proving Wall Street skeptics wrong and hitting stated return targets for 2019 and beyond.</p><p>This time last year, analysts were pummelling executives with questions about the prospects for the card business after branded-card revenue fell for the quarter. The bank had targeted 3% annual growth at its investor day in 2017 but then walked back its projection to flat for 2018. </p><p>One analyst on the 2018 second-quarter earnings call joked that their question would help reach a record number of card-related queries for Citi, to which CEO Michael Corbat gamely quipped that he'd provide a tally of questions about cards vs. questions about the bank's efficiency. </p><p>"<span>Clearly, US </span><span>Branded</span><span> </span><span>Cards</span><span> have faced headwinds, but we're seeing underlying momentum that gives us confidence in growth going forward," Corbat said on that 2018 call.  </span></p><p><span>But several weeks later, Citi announced a <a href="https://www.businessinsider.com/citi-is-shaking-up-its-consumer-bank-and-a-key-executive-is-out-2018-8">shakeup of its consumer-banking</a> business, including the exit of global cards chief Jud Linville. The bank finished the year with 1% growth in its North American branded-cards business.</span></p><p><span>With markets-sensitive sales and trading businesses taking a beating industry-wide, Citi's consumer bank has outshined in 2019, and its</span><span> credit-card business has become central to consumer growth. </span><span></span></p><p><span>Citi CFO Mark Mason attributed the success in North American branded cards, which is up 2% to $4.4 billion in revenue in the first half of 2019, to converting customers who signed up at promotional rates into interest-paying cardholders. The bank also said card purchases rose 8% to $93 billion.</span></p><p><span>"We have seen continued momentum in the consumer franchise, particularly in branded cards, as we've talked about over the past couple of quarters, with very strong performance this quarter as well on the heels of us converting those promotional balances to more average interest earning balances," Mason said. "We do expect that revenue growth to continue through the balance of the year."</span></p><p><span>Mining the bank's nearly 30 million US credit-card customers is <a href="https://www.businessinsider.com/citigroup-is-trying-to-tap-28-million-us-credit-card-to-boost-revenues-2019-2">part of the bank's overall strategy to boost revenue growth</a> in its sluggish consumer division, which has lagged peers in recent years. </span></p><p><span>Mason said earlier this year that only a slim portion of Citi's branded credit-card customers have a banking relationship with the firm, and that tapping those cardholders for more business could translate into big money for Citi. </span></p><p><span>He indicated on Monday that enticing those customers with tailored rewards offers was paying off, and that half of the $2 billion in new digital deposit sales this year stem from Citi cardholders that didn't previously have a banking relationship. </span><span></span><span></span></p><p>"The work that we've done in branded cards is going to continue to be a meaningful contributor to the revenue performance that we see in consumer North America," Mason said.</p><p>But analysts remain skeptical that the bank will hit key targets, including its goals of 12% return on tangible common equity this year and 13.5% ROTCE in 2020.</p><p>Mike Mayo of Wells Fargo - a frequent Citi critic who nonetheless has a "buy" rating on the bank's stock - noted on the earnings call that the bank "missed a lot of targets this decade" and questioned its capacity to hit reach stated return goals. </p><p>"You think Citi's going to get 13% ROTCE next year, and you're hard-pressed to find too many other people who agree with you," Mayo said. </p><p> </p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/why-american-men-suck-soccer-world-cup-2018-6">The US women's national team dominates soccer, but here's why the US men's team sucks</a></h3>        <div>                    </div>    </div>

In a stark reversal, Citi's revved-up credit-card business helped it beat earnings -&#160;and it may be pivotal in proving Wall Street doubters wrong

New Delhi, Apr 23 () With personal loans outstanding worth over Rs 25 lakh crore, industry body Assocham on Thursday flagged concerns that borrowers might find it difficult to make timely repayments and maintain their credit scores due to the coronavirus outbreak.<p> In a report, Assocham said that having witnessed a robust year-on-year credit growth of 17 per cent at the end of February 2020, personal loans outstanding was about Rs 25.32 lakh crore.</p><p> There is a grave challenge for borrowers to pay their EMIs on time without default and retain their credit scores, it noted.</p><p> Basing its analysis on the latest RBI data, Assocham said housing, vehicle loans and credit card segments formed the major chunk of the personal loan outstanding.</p><p> Though components like consumer durables have shown a big year-on-year growth of 43 per cent, the base was small with outstanding of Rs 6,495 crore.</p><p> ''As we deep-dived into the data, the areas of concern appear to be housing, credit cards, vehicle loans and education loans. Though the RBI has granted a three-month moratorium on EMIs,  deferment comes at the cost of compounding of interest as the tenure gets prolonged, " said Assocham Secretary General Deepak Sood.</p><p> The industry body said the credit card spenders were, in a way, leading the demand push and were sitting on an outstanding of Rs 1.11 lakh crore as at February-end, logging a significant annualised growth of 33 per cent.</p><p> Likewise, the housing sub-segment witnessed an annual expansion of 17.1 per cent with outstanding of Rs 13.30 lakh  crore .</p><p> Even before the coronavirus outbreak , vehicle loans were acting as driver for somehow reviving the automobile demand with outstanding loans of Rs 2.21 lakh crore with growth of 10.3 per cent, it said.</p><p> The outstanding for other personal loans aggregated to Rs 7.17 lakh crore with a growth of over 20 per cent.</p><p> Assocham said though education loans had shown a negative growth of 3.4 per cent, the aggregate outstandings were large enough at Rs 66,563 crore to pose debt-servicing risks, which would only scale up in the wake of employment situation deteriorating because of the lockdown and the subsequent costs to the economy.</p><p> ''The outstanding loans to be serviced in different tenures carry different rates of interest and penalty clauses. For instance, the credit card default attracts huge compounding costs. Moreover, there is not much clarity with regard to credit card outstandings in reference to RBI moratorium, " said Sood.</p><p> It further said  the personal loan borrowers always remain concerned about maintaining their CIBIL credit scores.</p> "Most of the  personal borrowers are young professionals who have long working career as also personal ambitions ahead of them. We must ensure that their concerns are addressed and their credit scores are not compromised. After all, they are a key component of the India story," said the Assocham Secretary General.   KPM  ANUANU

Individual borrowers may find it hard to repay loans on time amid coronavirus outbreak: Assocham

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Joe Raedle/Getty Images</span></p></div><p></p></div></div></p><ul><li><strong>US credit card delinquencies are rising, a potentially ominous sign for the economy. </strong></li><li><strong>Americans now have more credit card debt than before the financial crisis - over $1 trillion.</strong></li><li><strong>US household balance sheets are better positioned than before the recession, but "new delinquencies could be early sign of stress" according to Capital Economics. </strong></li></ul><p>Americans are having increasing trouble paying their credit card bills, a potentially ominous sign for an economy reliant on consumer spending for some two-thirds overall activity. </p><p><span>US credit card debt recently surged to new record highs, <a href="https://www.bloomberg.com/news/articles/2017-08-07/u-s-credit-card-debt-surpasses-record-set-at-brink-of-crisis">surpassing peaks seen before the 2008 financial crisis</a>. Several large US banks and credit card companies reported a rise in credit card delinquency rates for August, <a href="https://www.reuters.com/article/us-usa-creditcards-delinquencies/rising-credit-card-delinquencies-to-add-to-u-s-banks-worries-idUSKCN1BQ2E0">the second consecutive monthly rise</a>.</span></p><p>Michael Pearce, economist at Capital Economics, does not see the spike as a major threat to the growth outlook for now. But given the prospect of higher interest rates from the Federal Reserve next year, it could become a growing problem.</p><p>"The increase in new delinquencies may be an early sign of stress in household finances," he wrote in a note sent out to clients on Friday.</p><p>"After all, credit card lending is one of the most expensive forms of borrowing, and missing a credit card payment doesn't carry the same risk of repossession as falling behind on mortgage or car payments might," Pearce added. "The rise in new delinquencies is difficult to square with the continued strength of the labor market."</p><p><span><br /><div class="KonaFilter image-container display-table center"><div><div class="image on-image"><p class="source"><span>Capital Economics</span></p></div><p></p></div></div></span></p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Capital Economics</span></p></div><p></p></div></div><p class="source"><span>Capital Economics</span></p></div><p></p></div></div><div class="KonaFilter image-container display-table"><div><div class="image on-image"><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Capital Economics</span></p></div><p></p></div></div><p class="source"><span>Capital Economics</span></p></div><p></p></div></div></p><p style="text-align: center;"><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Capital Economics</span></p></div><p></p></div></div></p><p>The Fed expects to continue raising borrowing costs next year and <a href="http://www.businessinsider.com/fed-balance-sheet-reduction-unlikely-to-go-smoothly-2017-11">winding down its large balance sheet</a> as the US unemployment rate hovers nears historic lows - despite an inflation rate that continues to <a href="http://markets.businessinsider.com/news/stocks/fed-rate-hikes-may-be-hurting-growth-damping-inflation-2017-10-1004500846">undershoot the central bank's 2% target</a>.</p><p>Still, Pearce does not see any substantial short-term economic or financial fallout from the credit card sector, even if delinquencies were to spike sharply higher. For one thing, elevated US credit card interest rates are already largely untethered from the Fed-set federal funds rate, which is more relevant for housing and auto loan rates. Fed funds is just 1% to 1.25% after four increases starting in December 2015, and yet many Americans pay credit card rates well into the double digits.</p><p><span>Also, unlike the mortgage market, </span><span>the just over $1 trillion or so in outstanding credit card debt does not appear large enough to pose a systemic threat to the banking system in a $19 trillion economy. At the same time, overall household balance sheets are in better shape than they were before the financial crisis, <a href="http://www.businessinsider.com/us-consumer-debt-is-a-problem-for-the-poor-2017-10">even if the reality between richer and poorer households differs sharply.</a></span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Capital Economics</span></p></div><p></p></div></div></span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Capital Economics</span></p></div><p></p></div></div><p class="source"><span>Capital Economics</span></p></div><p></p></div></div></span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Capital Economics</span></p></div><p></p></div></div><p class="source"><span>Capital Economics</span></p></div><p></p></div></div></span></p><p><span></span><span>"Overall, the rise in new credit card delinquencies isn't too worrying for now and we suspect consumption growth will remain around 2.5% annualized over the coming year or so," he writes. </span></p><p>"But it is a timely reminder that the current economic expansion will not last forever. The five rate hikes we anticipate between now and the end of 2018 will take some of the wind out of consumers' sails, which we expect will drive a slowdown in economic growth in 2019."</p><p>In other words, the short-term risks from a blow-up in the credit card sector are not an immediate economic or financial risk per se, but could be an early signal of other mounting troubles for other sectors, which together could present considerable challenges to the economic outlook.  </p><p><span>The New York Fed recently sounded a warning about the $200 billion auto loan market, noting that <a href="http://www.businessinsider.com/there-are-worrying-signs-in-a-200-billion-corner-of-the-auto-loan-market-2017-11">delinquencies in subprime car loans have nearly doubled since 2011</a>. </span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/tesla-battery-model-3-production-issues-slow-battery-assembly-2017-11">Tesla's biggest problem is one nobody saw coming</a></h3>        <div>                    </div>    </div>

You Searched For "credit card growth" and got 12 results

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You Searched For "credit card growth" and got 12 results

Credit card growth experiencing a slowdown, as borrowers struggle to pay back loans

BI India Bureau

RBL Bank: Credit card revenues to be stable in FY21; cards growth to dip

PTI

Netflix's explanation for poor growth is just smoke and mirrors, according to credit card experts

Nathan McAlone

₹10,000 invested in SBI Cards during IPO is worth about ₹6,700 now⁠— here’s why

Sriram Iyer

Issuing banks need to boost rewards to better their credit card spend

Daniel Keyes

Netflix just blamed poor US subscriber growth on those new chips in credit cards

Nathan McAlone

America's $1 trillion credit card bill really isn't as bad as it seems

Jennifer Sor

Americans hold more credit-card debt than ever

Akin Oyedele

Americans have more credit-card debt than ever, and millennials are really struggling to pay theirs off

Hillary Hoffower

In a stark reversal, Citi's revved-up credit-card business helped it beat earnings -&#160;and it may be pivotal in proving Wall Street doubters wrong

Alex Morrell

Individual borrowers may find it hard to repay loans on time amid coronavirus outbreak: Assocham

PTI

Americans are having trouble paying off their credit cards - and it could spell trouble for the economy

Pedro Nicolaci da Costa

Popular Keywords

Buying Guides

In a stark reversal, Citi's revved-up credit-card business helped it beat earnings - and it may be pivotal in proving Wall Street doubters wrong