The changing landscape surrounding credit cards could pose challenges for department stores.
retailer preferences Macy’s and nordstrom We are dealing with a pair of Card-related threats The Wall Street Journal reported their final results on Wednesday (February 7). The first is a proposal from the side. Consumer Financial Protection Bureau The second is the reduction of late fees. The second is an increase in delinquencies.
The report said credit cards are important to department stores, with credit card revenue accounting for nearly half of Macy’s and Nordstrom’s operating profits in 2022. Bank of America Global Research stock analyst lorraine hutchinson.
for kohlsCredit card revenue exceeded operating profit, the report said, suggesting that without credit card revenue, the company would have posted an operating loss.
The report cited a 2022 CFPB report that said late fees are also significant for store-brand credit cards, accounting for about a quarter of these card issuers’ total interest and consumer fees. Stated. Typically, the breakdown of these revenue sources is stores, but analysts estimate that late fees are 14% and 30% of the overall credit card portfolio revenue.
However, the CFPB’s proposed measures could change that. Regulators aim to reduce typical late fees from about $30 to $8, which they say could save consumers up to $9 billion a year.
The rule is expected to be finalized in the coming months, but could face legal challenges that could delay or narrow it, according to a WSJ report.
Meanwhile, the health of U.S. consumers is also deteriorating, and credit card delinquency is on the rise, according to a new survey by the association. Federal Reserve Bank of New York.
A report released by the bank earlier this week Microeconomic Data Center It was revealed that approximately 8.5% of credit card balances and 7.7% of car loans are in arrears.
“Severe credit card delinquencies increased across all age groups, with younger borrowers in particular exceeding pre-pandemic levels,” the center said in a statement on Tuesday (February 6).
Looking at the percentage of loans in serious delinquency, 6.4% of credit card records that were 90 days or more past due reached that designation, compared to 4% during the same period last year.
This is a situation that is hitting younger consumers harder than other consumers. According to Federal Reserve data, 9.6% of credit card debt held by borrowers between the ages of 18 and 29 was more than 90 days past due, up from 7.6% last year. The 90+ day delinquency rate for borrowers aged 30 to 39 was 8.7% in the fourth quarter of last year and 5.7% in 2022.
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