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The 2021 Credit Card Data Book Part One: Internal Dynamics

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  • 26 Pages
  • March 2021
  • Region: United States
  • Mercator Advisory Group
  • ID: 5310009

Credit Card Industry Greatly Impacted by COVID, but the Worst Seems to Have Been Avoided

Unlike 2019, which was a banner year for many credit card issuers, 2020 proved to be far more tumultuous. COVID-19 caused widespread disruptions, economic uncertainty, and a steep rise in unemployment. Facing economic uncertainty, consumers largely reigned in their credit usage, causing revolving debt volumes to drop. Despite the potential for an economic disaster, however, the credit card industry remains largely stable, with delinquencies down across all loan types. According to the new report, The 2021 Credit Card Data Book Part One: Internal Dynamics, 2021 will likely end with a manageable rise in charge-offs. 

“Though the credit cycle risk indicators are artificially low and credit use has dropped considerably, current trends make it unlikely that a tsunami of delinquencies and charge-offs will crash over the credit industry in 2021,” comments Brian Riley, Director, Credit Advisory Service and co-author of this research report. “We will examine what these trends are in the second part of this report and analyze what they mean for credit card profitability, consumer interest in opening new credit cards, and lender attitudes on credit policy standards.” 

Highlights of the research report include:

  • Key industry metrics to watch in 2021
  • Decline in revolving debt
  • Drop in average credit card debt
  • Disruptions to the normal aging process
  • Trillions of dollars in contingent credit card liability

Table of Contents

1. Executive Summary2. Introduction
3. Credit Card Portfolios: Measuring Consumer Credit
  • Revolving Debt in the United States
  • The Reduction in Open Accounts and Average Debt Loads per Borrower
  • Credit Card Use Fell behind Debit as Consumers Reacted to a Worsening Economy
  • BNPL Lending and Instant Financing Grows as PLCC Usage Drops

4. Credit Risk
  • The Disconnect Between Current Delinquency Trends and Real Credit Risk
  • The Credit Card Aging Process
  • Early Credit Card Delinquencies Temporarily Drop
  • The Decline in Delinquencies across All Loan Types
  • The Flow towards Write-Off Decreases for Banks Large and Small, But Not Equally
  • Unused Credit Card Lines

5. Conclusion
6. References
  • Related Research
  • Endnotes

Figure 1: With COVID-19 disrupting daily life, revolving debt levels dropped in 2020
Figure 2: The drop in revolving credit card debt will reverse in 2021 as life returns to normal
Figure 3: The number of open credit card accounts declined in 2020, reversing years of steady growth
Figure 4: Average credit card debt burdens per borrower declined in 2020 as consumers restricted credit usage
Figure 5: Combined credit/debit transaction volumes dropped in 2020, though there was some recovery into Q4
Figure 6: Combined purchase volumes recovered by year’s end, but debit card volumes drove the growth
Figure 7: GP credit card usage fell and consumers reported increased use of instant financing options
Figure 8: GP credit card account numbers will stabilize despite slight drop; decline of PLCC will continue
Figure 9: Rates of new delinquencies moved swiftly downwards in 2020
Figure 10: Rates of new delinquencies will slowly grow once the aging process returns to its natural flow
Figure 11: Smaller banks are more vulnerable to delinquencies, leading to higher losses down the line
Figure 12: New 30-day delinquencies plummeted across consumer credit products in 2020
Figure 13: New 30-day delinquencies will rise across consumer credit products in 2021, with the exception of student loans
Figure 14: Serious credit card delinquencies will increase in 2021 despite dropping in 2020
Figure 15: Fewer balances making it through the aging process meant lower loss rates in 2020
Figure 16: Unused credit lines on general purpose cards are headed for a new peak



Companies Mentioned

  • ACI Worldwide
  • Bank of America
  • Chase
  • Citi
  • Federal Reserve System
  • FICO