Even Capital One, which lends to borrowers
who may be less creditworthy, reported
a decline in delinquency rates since a
momentary spike earlier this year.
But both industry data and analysts have made
it clear: The measures the government took
earlier this year have worked, and without
them, the industry and cardholders would be
in deeper trouble.
“The stimulus and unemployment benefits
have definitely helped the lower end of
(credit card borrowers),” said Sanjay Sakhrani,
an analyst at investment bank Keefe, Bruyette
& Woods.
As part of the $2 trillion coronavirus aid bill
Congress enacted in March, most Americans got
a $1,200 stimulus check. While the Census Bureau
found that the bulk of Americans used their
funds toward household expenses, roughly one
out of five used it to pay down debt. Experts also
argue that some household expenses would have
ended up on credit cards were it not for stimulus
checks and healthy unemployment benefits.
In some ways, what’s going on in the credit card
market also reflects the diverging fortunes of
those impacted by the pandemic.
Since the Great Recession more than 10 years
ago, few mainstream credit card companies
have put effort into lending to subprime
borrowers or to the poor. Credit card companies
are now focusing most of their attention on
middle- to upper-class borrowers, who typically
have jobs allowing them to work remotely and
are not in businesses that have been shut down
due to the virus.