Inflation Just Hit a 3-Year High. These Credit Card Stocks Will Show the Strain First.
All lenders are in the same economic boat, but some borrowers are more resilient than others.
Overview
Life's becoming increasingly expensive. That's the big takeaway from the U.S. Bureau of Labor Statistics' measure of May's inflation. Led by higher energy costs, consumer prices were up a hefty 4.2% year over year, rising at a pace last seen in April 2023. Prices are expected to remain similarly elevated for the foreseeable future too. And it's not just in the U.S. Inflation is up on worldwide as well.
It's a problem for the global economy, of course, and in particular, a risk to credit card lenders. Consumers here and abroad are racking up more and more credit card debt, not because rising income is giving them the confidence to splurge, but because they increasingly need to finance life's basic needs like groceries. For perspective, the Federal Reserve reports credit card debt among U.S. borrowers ended the first quarter at a near-record $1.25 trillion, up 5.9% from the year-earlier comparison.
Details
Cracks are starting to show too -- some modest and some not. One of the not-modest red flags is the fact that an 18-year high 13.2% of credit card accounts are now at least 90 days delinquent on their payments.
Source
Originally published at www.fool.com.