The market picture: Other card issuers, including JPMorgan and Citi, also reported strong Q2 volume growth. Record-high inflation likely played a role in those gains by increasing spending on a dollar-for-dollar basis.
Bank of America’s results fit this trend, although organic growth may also have contributed to higher volumes. The post-pandemic resurgence in consumer spending on travel and entertainment—which surged 54% YoY in Q1 2022, per Cardlytics—likely boosted volume
What next? Mounting concerns about high inflation and economic uncertainty are forcing banks to prepare for a possible recession. Bank of America made a $523 million provision for credit losses but released $48 million from its bad loan buffer.
In the event of a recession, lenders would also have to contend with shrinking card spend.
- Strategies to counter this could include innovative programs to boost payment flexibility, like post-purchase installment plans that mimic buy now, pay later (BNPL) products.
- Card issuers could also use credit card apps to drive user engagement for mobile financial management tools.
- And issuers can promote practical benefits from cards that consumers will value more, such as rewarding cardholders for paying bills on time or maximizing rewards for household staples.
Dive deeper: Read our Era of Uncertainty: Credit Cards report for more on how a recession could impact issuers and what they could do to respond.