- Credit-card delinquencies, application rejections, and involuntary account closures are all on the upswing, according to a report from the Federal Reserve Bank of New York.
- The Fed says these developments are “potentially concerning” given the strength of the economy and comparatively low interest rates.
- The trends most likely indicate that credit-card companies issued debt too freely in the preceding years.
- But they could also signal that lenders are bracing for an economic downturn and paring back risk accordingly.
The economy is robust, unemployment is sitting at 3.7%, its lowest mark in nearly half a century, and interest rates, though moving upward, are still relatively low.
So why are credit-card delinquencies, application rejections, and involuntary account closures all on the upswing?