A Credit Card Chief Says Consumers Are Back Out and Shopping

(Bloomberg Businessweek) -- Despite the pandemic, many consumers are staying on top of their bills, says the CEO of Synchrony Financial, the lender behind many store-brand credit cards. And quite a few are going shopping.

What are you seeing in terms of delinquencies?

About 75% of the customers who initially put themselves into a deferred payment status have come out of that and are paying. Is it the stimulus? Is it the fact that people aren’t spending money elsewhere? Probably all these things are helping. Another is that people aren’t driving, and gas prices are down even if they are. So there are extra dollars there.

How is the consumer doing in general?

Certainly the consumer is back out and shopping. It isn’t just in the states that I would say are completely open, it’s across the board.

What kinds of purchases are making a comeback?

Things related to the home are very strong. People have given up vacations: They’re fixing up their homes and doing activities around the house with their children and their families.

How big of a bounce back do you foresee?

There’s still a lot of federal economic stimulus money out there, and that’s something we have to pay attention to. We have to make it through this summer, see when the stimulus runs out, and then see where we stand.

Store cards can have rates of 20% or more. Because of the effects of the pandemic, have you rethought any of that strategy?

Part of this is the rewards people get on the cards and how you pay for those. When you look at most of our rewards, they’re richer than a general purpose card. There’s a misconception that private-label credit cards are mostly subprime. I’d say its mid-prime, the type of customers who do need these cards. We think we manage those cards well, and we treat our customers with great respect. When we get customers who are in trouble, we are trying to do the right thing to help them.
 
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