The American economy hit an ominous new milestone today, as credit card balances hit an all-time record high. That was enough to bring fractional gains for the three major credit card stocks; Mastercard (NYSE:MA) led the way, while Visa (NYSE:V) came in second and American Express (NYSE:AXP) had the third highest results.
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It’s a milestone, make no mistake about it, but it’s not exactly the kind of milestone you want an economy to reach. Collectively, Americans owe a combined total of $1.08 trillion in credit card debt. That’s the word from the Federal Reserve Bank of New York, and that’s largely thanks to a $154 billion surge in 2023 against 2022. That jump is the single largest jump seen since 1999. New York Federal Reserve economic research advisor Donghoon Lee noted that such a surge was “…consistent with strong consumer spending and real GDP growth.”
What Lee doesn’t seem to factor in—almost unfathomably—is the still-ongoing rise in consumer prices that’s been going on that entire time. Indeed, credit card delinquency rates are also on the rise, the New York Fed noted, particularly among borrowers in their 30s. Student loan debt—which recently became a factor again despite the government’s best attempts to make it not a factor—is also said to be weighing that particular cohort down. Bankrate analyst Ted Rossman noted that “economic inequality” is on the rise, and subprime auto loan delinquencies are also up, suggesting that Lee’s projections of a strong economy are, perhaps, illusory.
What Credit Card Company is Best to Invest In?
Turning to Wall Street, there aren’t very clear winners and losers in the credit card stock space. In fact, as far as upside potential goes, fewer than two percentage points separate the leader from the laggard. The laggard is V stock, if it can be called that; this Strong Buy offers a 13.23% upside potential on its average price target of $276.95. Meanwhile, Strong Buy MA stock comes out the leader, offering a 15.08% upside potential on an average price target of $447.82.
