We’re conditioned to expect the unexpected in today’s constantly evolving credit and lending environment. Still, what we uncovered after analyzing the recent credit card portfolios of the top six credit card issuers in the United States may surprise you.
Together, these banks manage approximately 70% of all credit card receivables in the country, giving us a clear view into how the market at large is performing.
Top three credit card portfolio trends:
1. Prime and super prime receivables are growing rapidly
Our analysis showed that both prime and super prime receivables have already surpassed the pre-pandemic high we saw in Q4 of 2019 by 5%. Subprime receivables, on the other hand, are still 3% less than their pre-pandemic high.
2. Write-off rates for subprime receivables are way up
We found that subprime write-offs are up by 45% from their lows during the pandemic. Prime and super prime write-offs are both up 20% from the peak of the pandemic, but that is still 50% below their pre-pandemic highs in Q4 of 2019.
3. Accounts receivable growth is strong overall
In our analysis, we uncovered that accounts receivable growth has surpassed pre-pandemic highs for a couple of the top six credit card issuers. It is possible the remaining four banks will see the same in short order.
What does the future hold for accounts receivables?
It goes without saying that even the world’s best projections cannot predict the future of accounts receivables with complete accuracy. That said, we will have a far better feel for where the market is headed in the next three months or so.
If write-off and delinquency rates match or surpass pre-pandemic rates in the next quarter, that will be a clear indicator that far higher write-off and delinquency rates are on the horizon for the top six credit card issuers and the industry as a whole. If this scenario does not happen, we will have to go back to patiently analyzing and reevaluating the greater macroeconomic environment to uncover how the industry is trending.
What does this mean for contact center costs and staffing?
Industry statistics, rates, and analyses are critical, but the “so what” is: if write-offs and delinquency rates continue to grow, the demands on contact centers will grow right along with them.
Staffing up is one way to plan for an increase in contact center demand. With wage inflation and the rising difficulty in hiring, training, and retaining agents, this may be easier said than done. Embracing new technology and software solutions is often a more promising path.
Contact center artificial intelligence (AI) solutions are a proven way to help agents get more of the highest value work completed in less time. This means, contact centers can see tremendous gains in payments, customer satisfaction, and compliance without hiring additional agents. AI-powered solutions are the modern way for contact centers to do more with less, which will likely only become increasingly important over the next several months.
Prodigal is here to keep you up-to-date on the latest credit and lending trends. To ensure you never miss an update, follow us on LinkedIn: linkedin.com/company/prodigaltech/