The majority of bankers in a recent survey expect the average credit card balance to increase over the next six months but only about a quarter of them predict that delinquencies will increase. These are the results of the latest quarterly survey of U.S. bank risk professionals conducted by FICO and the Professional Risk Managers’ International Association (PRMIA).
This news continues a trend of positive signs regarding consumer credit. Earlier in the week, Federal Reserve data found that credit card debt posted its largest increase in a year, a sign that consumers may be more optimistic about their personal finances. In addition, the American Bankers Association reported the delinquency rate on credit cards is at the lowest point since 1990.
For the first time in the survey's history, respondents expect an equilibrium in the credit gap where the growth of credit demand does not exceed the growth of credit supply. FICO and PRMIA have polled bank risk professionals each quarter since the beginning of 2010, seeking their predictions of credit risk, credit supply and credit demand over the next six months.
Here are additional results from the survey conducted during the second quarter of 2013:
- Almost 52 percent of respondents expect requests for credit line increases to rise, while 3.5 percent expect such requests to fall.
- Only 7 percent expect credit card balances to decline.
- 63.9 percent believe the interest rate for consumer credit will stay the same, an increase of 10 points from last quarter. 33 percent believe the interest rate will increase. Very few expect the interest rate to go down.
- 51.4 percent predict the volume of credit card applications to increase.
- 49.3 percent believe the approval rate will remain the same, but 55.6 percent predict the amount of consumer credit given by lenders will increase.
- 55.3 percent believe the total number of delinquencies will stay the same.