Despite recent increases, the average credit card delinquency rate for six major U.S. credit card issuers was below 1% of their portfolios in 2022, remaining lower by historical standards.

The average 30-plus-days credit card delinquency rate for American Express Co., Bank of America Corp., Capital One Financial Corp., Citigroup Inc., Discover Financial Services and JPMorgan Chase & Co. in 2022 was 0.86%, according to S&P Global Market Intelligence data. The delinquency rate has not exceeded 1% in the last seven quarters. Full-year 2021 average delinquency rate for the six card issuers was 0.90%.

Consumer spending holding up

Rising interest rates and high inflation are putting pressure on consumer financing, but the market remains strong and consumer spending is holding up, according to the American Bankers Association's credit card market monitor for the second quarter of 2022.

In the last 12 months, only Capital One and Discover Financial had average delinquency rates that were just above 1%. The remaining four had delinquency rates under 1%.

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In December 2022, the six lenders had an average delinquency rate of 0.98%, higher sequentially and from a year ago. This was also the highest since the rate fell below 1% in April 2021, at 0.97%.

However, delinquency rates remaining "low by historical standards" suggests that consumers are managing their finances through a period of increasing prices, the Federal Reserve Bank of New York concluded in a November 2022 report.

Credit slowly normalizes

The average credit card annualized net loss rate for the six card issuers was 1.20% in December 2022, up both month over month and year over year.

The six card issuers' average net loss rate breached the 1% mark in February 2022 at 1.09%, after dipping under 1% for the first time in at least a decade in September 2021.

Bankers have long anticipated credit to "normalize" at pre-pandemic levels as consumers get back to their usual lifestyles despite rising commodity prices. But the normalization seems to have been slower than bankers thought.

JPMorgan CFO Jeremy Barnum predicted during the bank's fourth-quarter 2022 earnings call that net loss rates will still be normalizing in 2023 but still well below the fully normalized level. He said the entry to delinquency rate is the leading indicator of banks' future charge-offs.

Lenders' portfolio yields steadily rising

The six major U.S. credit card issuers posted an average master trust portfolio gross yield of 23.45% in December 2022, up 151 basis points from December 2021.

All six lenders booked year-over-year increases in their average portfolio yields in December 2022. For full year 2022, the six lenders had an average portfolio yield of 22.15%.

Access data on credit card master trust yields, net charge-offs and delinquencies in Excel format.