By the numbers: Major US credit card issuers highlighted a consumer borrowing resurgence in their Q2 2023 earnings.
But deposits continued their monthslong decline: Average deposits at Wells Fargo and JPMorgan fell 7% and 6%, respectively. Citi’s deposits were flat, buoyed by a rise in institutional deposits.
Whispers of optimism: Rising card borrowing could be a sign of consumer confidence.
What to watch out for: Despite positive signals from spending, we’re not out of the woods yet.
The record debt paired with high interest rates could spell trouble for rising delinquencies.
This slow growth rate isn’t yet concerning for issuers, but if the economy worsens, it could lead to trouble down the road.
The big takeaway: While the US has thus far avoided a recession, very real threats could alter spending patterns and loan risks in the future.
A recession would put more than $200 billion in credit card revenues at risk, so issuers must take steps to ensure they can weather the potential storm.
Dig deeper: For more on potential risks for issuers in the current economy, read our report Credit Card Risks in a Darkening Economy.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.