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Credit card growth has been slowing over the past two years, and a report Thursday from Transunion forecasts balances will continue to grow at a slower pace next year, while delinquencies will level off.
Michele Raneri, VP and head of U.S. research and consulting for the Chicago consumer credit reporting agency, said inflation, which fell 2.7% in the 12 months through October, will end 2025 at about 2.26%, while wage increases will at least keep pace.
“We’re expecting that to help consumers with their credit card debt and with their delinquencies,” Raneri said.
Meanwhile, the Fed’s G-19 Consumer Credit Report released Monday showed that credit unions held $84.5 billion in credit card debt Oct. 31, up 5.3% from a year earlier and up 1.4% from a month earlier, far more robust than the average September-to-October gain of 0.4% from 2014 through 2023. Credit unions’ share was 6.3% in October, down from 6.4% a year earlier and unchanged from September.
Transunion’s estimates of credit card balances run lower than those tracked by the Fed. The changes from year-to-year also differ in magnitude, but the general direction is the same.
For example, the Fed’s G-19 report shows total credit card balances were $1.33 trillion at the end of 2023, rising 8.8% from a year earlier. Transunion’s 2025 Consumer Credit Forecast released Thursday shows the balance rose 12.6% to $1.05 trillion in 2023.
From there, Transunion expects balance growth will subside to 3.9% in 2024, which is close to where the Fed’s downward slope of growth points for December. Transunion expects balance growth will be 4.4% in 2025.
Raneri said consumers cut back on their card balances during the pandemic with the help of government support checks and a shortage of some goods.
They ran up their balances in 2022 and 2023, when goods became more available and inflation spiked. “That’s when we started to see those higher delinquencies,” she said.
“After five years, things are starting to get back to normal,” she said. “People’s fears or anxieties that they had after the pandemic are subsiding.”
Transunion also expects delinquencies will flatten for credit cards, personal loans and auto loans. It measures serious delinquencies for credit cards at 90 days or more, showing the rate rose 33 basis points to 2.59% by December 2023, and forecasting it will rise 5 bps this year and 12 bps in 2025.
For auto and personal loans, Transunion measures serious delinquencies at 60 days or more. The auto loan delinquency rate is expected to rise from 1.42% in 2023 to 1.45% by Dec. 31 and 1.38% by the end of next year. Personal loan delinquencies are expected to rise from 3.90% last year to 3.87% in 2024 and 4.00% in 2025.
The report said a key element behind the 13 bps increase forecast in personal loan delinquencies next year is because lenders are likely to expand “their buy boxes to riskier borrowers as the economy continues to stabilize.”
The Federal Reserve’s monthly Consumer Credit Report also showed lenders of all types held $1.33 trillion in credit card debt Oct. 31, up 5.9% from a year earlier and up 1.22% from September, compared with the 10-year average October gain of 0.6%.
Banks held $1.2 trillion in credit card debt, up 6.4% from a year earlier and up 1.25% from September, compared with the 10-year average October gain of 0.8%. Banks’ share was 90.8% in October, up from 90.5% a year earlier and unchanged from September.
Contact Jim DuPlessis at [email protected].
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