Consumers turn to credit cards, loans as costs soar – report
Credit card is seen in front of displayed American Express logo in this illustration taken, July 15, 2021. REUTERS/Dado Ruvic/Illustration
More consumers opted for credit cards and unsecured loans in the third-quarter from a year earlier amid decades-high inflation, according to a report on Tuesday from global credit rating firm TransUnion.
While delinquencies for most credit products are treading in line with pre-pandemic levels, they have risen in comparison to levels seen in 2021, the quarterly Credit Industry Insights Report (CIIR) added.
The outlook for consumer credit quality has been clouded in recent months amid deteriorating macroeconomic conditions, fueled by worries of an upcoming recession as central banks around the world race to tighten monetary policy.
Most consumer-facing U.S. banks, including JPMorgan Chase & Co and Bank of America as well as credit card giant American Express, built rainy-day funds in the third-quarter for loans that could potentially sour as consumers start feeling the pinch of the economic slowdown.
According to the report, credit card balances continue to grow, with bank card balances reaching a record high of $866 billion in the third quarter, driven primarily by Gen Z and millennial borrowers.
