Shifting Consumer Dynamics to Present Challenges for Credit Card Issuers in 2024

This commentary reviews the outlook of Credit Card Issuers in 2024.

Key highlights include:
-- We expect credit card spending to remain healthy but with growth staying closer to the mid-single digit range. We expect the resumption of student loan payments as having a minor impact on credit card spending.

-- Following strong growth in credit card balances since early 2022, we anticipate growth will also decelerate to the mid-to-high single digit range for 2024.

-- Credit performance metrics should weaken further through 2024 but likely stabilizing within normalized levels towards year-end to early 2025, assuming there is no significant weakening in the labor markets.

-- The resumption of direct federal student loan payments last October, the increased debt burden from high interest rates and increased cost of living (despite the abating inflationary pressures) are potential headwinds to credit performance for card issuers.

“Overall, DBRS Morningstar expects a less favorable operating environment for credit card issuers in 2024 as consumer dynamics shift and are less of tailwind to credit card issuer performance. While we expect weaker financial performance in 2024 compared to 2023, we still expect performance to be supportive of current credit ratings.” said Yanni Koulouriotis, CFA, Vice President – Global FIG.