Experienced, Compassionate and Effective Advocacy

Store-branded credit cards reach 7-year high delinquency rate

On Behalf of | May 31, 2018 | Bankruptcy

According to a recent study, the delinquency rate on store-branded credit cards is spiking. The study indicates that the delinquency rate consumers in Virginia and throughout the country are facing is currently at a seven-year high. This could be bad news for consumers as it might portend an increase in household debt.

The study, compiled by the credit bureau Equifax, shows that 4.65 percent of all store-branded credit cards are at least 60 days past due as of March 2018. This number increased from 4.08 percent from March 2017 according to the same study. The current rate is the highest delinquency rate on these cards since 2011.

Experts are split on the cause of this spike. Some industry experts point to a mistaken belief by some consumers that there are no consequences for allowing a card from a closed retailer to go delinquent. However, private-label cards for shuttered businesses like Toys R Us still report delinquent debt to credit agencies.

Other experts cite banks’ increasing expansion into subprime lending. Store-branded cards have long been more accessible than other forms of credit, and that trend seems to be expanding in 2018. It is also worth noting that interest rates on these store-branded cards are often higher than a traditional credit card, making it easier for debt to quickly spiral out of control.

Filing for bankruptcy is one option for dealing with the unsecured debt caused by store credit cards. Upon receiving a bankruptcy discharge, a debtor may reduce or eliminate credit card debt while maintaining their assets and getting a fresh financial start. An attorney with experience in bankruptcy law may be able to provide a debtor with an understanding of the risks and benefits of filing for bankruptcy. The attorney may be able to rely on their experience to help minimize any lasting consequences that a bankruptcy filing brings.