Credit card balances grew in April at fastest rate in 26 years

Two years after massive cash buffers helped many U.S. consumers pay down their debts, credit card balances are back.

In April, credit card loan balances jumped by 17% from a year earlier, the fastest pace of growth since 1996, according to an Autonomous Research analysis of Federal Reserve data. The rise is an indication that card repayments are ebbing a bit — which, combined with heavy spending on credit cards, is leading to cardholders rebuilding their balances.

“Loan growth is running hot,” Autonomous analyst Brian Foran wrote in a note to clients, adding that payment rates are “still sky high but may have finally peaked.”

Credit card delinquency rates have risen in the last several months, but they are still 35% below their April 2019 levels, according to Brian Foran, an analyst at Autonomous Research.


The finding lines up with bankers’ recent commentary on consumers’ economic strength, even as inflation, the war in Ukraine, higher interest rates, recession fears and market volatility threaten to dampen their spending.

Those factors have weighed lately on consumer confidence, contributing to a 9.4% decline this month in the University of Michigan’s index of consumer sentiment. But if consumers are worrying more about the future, it doesn’t appear to be impacting their spending.

U.S. retail sales rose by 0.9% from March to April, according to a Census Bureau report on Tuesday. They were up 8.2% from April 2021.

Spending growth was particularly strong in the food services and drinking category, where sales increased by 19.8% from a year earlier, as COVID-19 vaccinations and the removal of pandemic-related restrictions helped fuel increases in purchases.

But critically, higher spending at restaurants is “not eating into goods spending at all,” according to Aneta Markowska, chief economist at Jefferies, who noted that sales have continued to rise in sectors ranging from apparel to department stores.

“April retail sales rose solidly and showed no sign that the consumer is cracking under the weight of inflation, higher interest rates or the lack of stimulus payments,” Markowska wrote in a note to clients.

In recent weeks, bank executives have expressed caution about the rising risk of a recession. But they have also pointed to healthy household balance sheets as one factor limiting the deterioration in credit quality.

“The consumer has money. They pay down credit card debt,” JPMorgan CEO Jamie Dimon told analysts last month, arguing that some $2 trillion in savings and checking accounts should continue to act as a buffer.

Executives at the credit card issuer Synchrony Financial have been similarly optimistic about customers’ financial standing. “The consumer is in a great position to deal with some of the uncertainty that’s happening today,” Chief Financial Officer Brian Wenzel said in an interview last month.

Stamford, Connecticut-based Synchrony saw its loan balances rise to $79.7 billion at the end of April, up 4.2% from last year, according to monthly data it released this week.

Other card issuers that released similar monthly data also reported upticks. At Capital One Financial, domestic card loans rose to $109.8 billion in April, a 21% increase from last year. At American Express, total consumer card loans were up 25% from a year earlier. At Discover Financial Services, they grew by 12% from April 2021. And at Bread Financial Holdings, formerly known as Alliance Data Systems, credit card loans and other loans rose by 11.5%.

Despite the increases in card balances — and a possible peak in customer payment rates, which soared in the pandemic’s earlier stages amid reduced consumer spending and large government stimulus payments — credit card issuers are continuing to enjoy low delinquency rates, according to Foran.

Late-payment rates have generally risen in the last several months, but they are still 35% below their April 2019 levels, Foran wrote. His analysis relied on data from Synchrony, Capital One, American Express, Discover and Bread.

Signs of a return to more normal levels of delinquencies are “starting to emerge,” but late payments remain “very controlled,” Jon Arfstrom, an analyst at RBC Capital Markets, wrote in a recent note to clients.

“As we progress through 2022, we do expect some continued normalization in credit, though we expect this to be very manageable,” Arfstrom wrote.

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