Credit Card and Personal Loan Delinquencies Are Expected to Surge In 2023
By Fox Business
Consumer credit reporting agency TransUnion anticipates delinquency rates for credit cards and personal loans will jump next year to highs not seen in more than a decade due to shifts in consumer behavior following months of surging interest rates and persistently high inflation.
The company’s 2023 Consumer Credit Forecast released Wednesday projects serious credit card delinquencies will climb to 2.6% over the next 12 months, up from 2.10% this year, and unsecured personal loan delinquency rates are expected to reach 4.3%, up from 4.10%. TransUnion said delinquency rates for those categories have not reached that level since 2010.
“Rapidly increasing interest rates and stubbornly high inflation combined with recession fears represent the latest in a series of significant challenges consumers have faced in recent years,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “It’s not surprising then to see pronounced increases in delinquency rates for credit card and personal loans, two of the more popular credit products.”
TransUnion pointed out that the past two years have seen aggressive loan growth and delinquency rates hovering near pre-pandemic levels. But now, they expect that to change.
Raneri says the credit card delinquency rate forecasted for 2023 is considered high and told FOX Business “a contributor to that is that there was so much stimulus money that was provided to consumers that they were able to use – that I think they probably got kind of used to having – that when it came time that they had used quite a bit of it and start depleting that savings … they weren’t able to pay all of their credit cards like they used to be able to.”
