Discover was in the news for this as well
Seems like MSN is late to the party as were talking about this back in April, FWIW I saw the increase in defaults starting in 11/2016 in my Lending Club account (I was soley in the 3 bottom tranches) though I wasn't smart enough to think this was a full market issue.
I'm not certain what the data suggests really as it's still well within historical norms as the average is like 5% historically looking at one of their other charts; though of course the spike is what they're looking at... that said based on my April / May LC results I suspect Q2 Synchrony isn't going to be much better.
I don't think the sky is falling yet, and the wave of CLD's by Cap 1 weren't taken against subprime borrowers or risky bets, the ones I saw at least were easily explainable by simple capital reallocation... CLDing unused 35K lines to 10K, like why did they wait so long?
@Anonymous wrote:
This is what happens when credit is extended for people with shabby credit profiles. Many think credit cards as money in the wallet not another type of loan!! Also you need blame financial institutions such as synchrony when they were handing out 25K CLs like candy. Its all about responsible use of credit which is good for the entire credit card demography!!
Meh, shabby profile doesn't mean they spend outside their means or are going to think CC's are money in pocket; my file has been shabby by definition for my entire life, still is actually on all three bureaus.
Since none of the articles actually mentioned the size of the problem, this is from Cap 1's 10Q:
| Q1 2017 | Q1 2016 | Variance | ||||
Net charge-offs | $1,510 | $1,178 | 28% | |||
Net charge-off rate(11) | 2.50% | 2.08% | 42 bps |
That includes more than just credit cards but that's not the sky is falling losses and C1 expected it looking at their charge off provisions, but here's an interesting thing
3/2017 | 12/2016 | |||||
30+ day performing delinquency rate | 3.68% | 3.91% | (23)bps | |||
30+ day delinquency rate | 3.71 | 3.94 | (23) |
Late payments went down Q1 2017 compared to Q4 2016.
Charge offs are by definition around 6 months lagging or more 30D deliquencies so this stuff went delinquent sometime before September.
I care a lot more about recent metrics than prior losses, and a 6% swing in the deliquency rate in the performing direction, seems like a good thing.
Had I been smarter, I would've used this data to manage my LC portfolio but oh well, live and learn if I ever try the LC or other P2P lending experiment again.
@pipeguy wrote:Just got ready to post this story - ya beat me to it
Probably explains the AA and CLD's folks are experiencing as of late - thankfully I have not had and AA or CLD on any of my accounts.
Yep, pipeguy, I agree that this begins to answer the questions, especially Cap1, why they're taking AAs to lower their risks. I'm really glad none of these cards are in my portfolio.
I have been letting balances rise and am hording the cash converted into metals. I have always had a plan should the economy start to go off its track.
I would say that people are over extended. The chapter 7 bankruptcy market has grown and once the credit is cleared, it is like cards cards everywhere without the income to support these various cards which leads to the vicious cycle of not being able to pay.
@tricie17 wrote:I would say that people are over extended. The chapter 7 bankruptcy market has grown and once the credit is cleared, it is like cards cards everywhere without the income to support these various cards which leads to the vicious cycle of not being able to pay.
We don't appear to be doing that badly on that front? This is consumer data
http://www.creditslips.org/.a/6a00d8341cf9b753ef01b7c8c653b2970b-popup