The bill comes due. This is an inevitable fact of life when viewed as a metaphor and an absolute when viewed in terms of credit. And the word from several credit card companies isn’t particularly well in terms of delinquencies and charge-offs (debt unlikely to be collected). Three different card companies revealed their stats today, and two out of three took a hit for it.
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Capital One Financial (NYSE:COF) slipped nearly 2.5% in Friday afternoon’s trading, while Synchrony Financial (NYSE:SYF) dove nearly 3.5%. The only one to buck the trend—and even then, barely—was Bank of America (NYSE:BAC), who notched up fractionally.
Bank of America offered mixed news about its credit cards, noting that delinquencies were up from 1.35% in January to 1.39% in February. However, it brought that back by having its net charge-off rate go from 2.23% to 2.05%. Meanwhile, Capital One saw the opposite, with delinquencies down slightly—from 4.78% to 4.72%–but charge-offs rose from 5.71% to 5.95%.
Finally, Synchrony Financial saw all its rates worsen, with delinquencies up to 5% and charge-offs rising from 6% to 6.5% in a month-over-month comparison. All three companies were below their pre-pandemic highs, but Synchrony is actually within 50 basis points of clearing February 2020 levels.
The Bill Comes Due
It’s a safe bet that most of us knew this was coming. We knew anecdotally from the rise of buy now pay later (BNPL) options that punctuated the holiday shopping season. Holiday shoppers shelled out a whopping $16.8 billion in BNPL options, most of which are still being paid off right now. And on top of that, there’s still the matter of straight-up credit card debt to consider.
As of January 2024, 61% of Americans have some form of credit card debt, with the average amount owed standing at $5,875. Throw in a passel of corporate layoffs, and it adds up to bad news for delinquencies, charge-offs, and even banks in general, as two out of three saw today.
Which Credit Card Stocks Are a Good Buy Right Now?
Turning to Wall Street, SYF stock is the laggard of the bunch. This Moderate Buy-rated stock offers investors a 3.17% upside potential against its $43.10 average price target. Meanwhile, with an average price target of $147.38 and a Hold rating, COF proved the leader, offering investors an 8.27% upside potential.
