The data: Major US credit card issuers rounded out 2022 with tempered results as consumers contended with stronger economic headwinds.
Card spending in Q4 was consistent with prior quarters in 2022, but couldn’t compete with 2021’s post-lockdown spending boom.
Key context: Two factors likely affected volume growth in Q4 2022.
Looking ahead: Economic headwinds coupled with an elevated reliance on credit cards among consumers may increase the risk of missed payments and delinquencies.
While it’s up to the National Bureau of Economic Research (NBER) to declare a recession (which sometimes doesn’t happen until after the recession is over), some economists at big banks are expecting one in 2023. And there are signs that consumers are feeling financially strained.
Banks are already setting aside cash to cover potential delinquencies. Some have also cut costs by devaluing select credit card rewards. To help consumers better manage their spending, banks might also integrate flexible payment features into their cards, which players like TD Bank have already done.
Related content: Check out what our Banking Innovation analysts have to say about Q3 earnings and what banks are doing to prepare for an economic downturn.
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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