In an era where financial flexibility is paramount, rising credit limits have become a significant trend within the banking and payments industry. As consumers increasingly rely on credit to manage their expenses and build their financial profiles, banks are responding by raising credit limits to accommodate this demand. This move highlights the evolving dynamics of consumer credit behavior.
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Data for today’s episode is provided by Javelin Strategy & Research’s Report: Credit Card Data Book Part 2: Internal Dynamics
Credit Limit in Past 5 Years (in Trillions of Dollars)
- $3.80 – Q3 2019
- $3.85 – Q3 2020
- $3.96 – Q3 2021
- $4.30 – Q3 2022
- $4.71 – Q3 2023
Source: New York Fed Consumer Credit Panel/Equifax (2024)
About Report
Part 2 of the annual Javelin Strategy & Research examination of the U.S. credit cards looks at how internal dynamics, such as issuer portfolios and ongoing risk assessment, affect the market. The upshot: As economic stressors rise and loan loss provisions are reserved, the return on assets is declining across the large card issuers, and underwriting standards are tightening as issuers steer their portfolios away from trouble.
Although indications are that a recession, if it occurs, is likely to be mild rather than severe, there are concerning indicators. Credit card balances are going up steadily, and the rate doesn’t appear to be slowing. Banks are also encountering higher delinquencies and charge-offs, with small to midsize institutions taking the biggest hits. These factors demand caution by issuers until the path forward clears.