By the numbers: Bank of America’s total payment volume hit $1.1 trillion in Q1 2023, per its earnings presentation—a 9% year-over-year (YoY) increase. Growth slowed from 14% YoY in Q1 2022.
Credit and debit, which make up 75% of the bank’s payment transaction volume, increased 6% YoY.
But with overall spending holding positive, consumers are racking up debt as inflation strains their budgets. Bank of America’s net charge-offs of $807 million in the first quarter were an increase on both a quarterly and yearly basis. And the issuer’s credit card delinquency rate increased to 1.14% in February from 1.09% in January—although that’s still below pre-pandemic levels.
Card volume growth raises eyebrows: Credit card debt is at a record high and becoming harder to pay off.
The CFPB wants to mitigate these concerns by increasing credit card competition and reducing costs, Director Rohit Chopra explained in a blog post this week.
The bigger picture: The spending slowdown Bank of America faced in Q1 is only going to get worse—BofA already warned that credit and debit volume slowed in March. Banks also need to prepare for a future rise in delinquencies, and many may end up tightening lending standards.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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