You may be out buying last-minute presents, but the elves here at the FRED Blog are still at work contemplating credit card delinquency rates. It’s not the most festive topic, but there are at least a few interesting observations.
The graph above shows delinquency rates that range from slightly below 2% to slightly below 7%. This range could seem high, given these are unsecured loans: that is, without any collateral, such as a house to back up a mortgage loan. Or this range could seem low, given the relatively high interest rates that credit cards typically carry.
Beyond the obvious increase in delinquencies during recessions, we notice that smaller banks now have noticeably higher delinquency rates than the largest 100 banks. This is a new development. Have the smaller banks become significantly worse at selecting their credit card customers? Or has the composition of the pool of smaller banks changed in some other way?
Finally, we don’t detect any seasonal aspects in these rates. So, your last-minute December shopping may not have an immediate impact on your ability to repay your credit card. So, happy holidays!
How this graph was created: Search for “delinquency rate,” check the relevant series, and click “Add to Graph.”
Suggested by Christian Zimmermann.