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Major credit card companies are shifting their strategies as a wave of financial warnings emerges. Delinquency rates have returned to pre-pandemic levels, and with market volatility fueled by President Trump’s latest tariffs, lenders are preparing for what could become a sustained economic slowdown.

Credit Card Companies Saving Up and Scaling Down

In their latest earnings calls, JPMorgan Chase, Citigroup, Synchrony, and U.S. Bancorp all reported increased provisioning for credit losses. These moves signal that industry leaders expect more consumers to struggle with repayment. JPMorgan, for instance, added nearly $1 billion to its rainy day funds this quarter. Citigroup raised its total reserves by $1 billion as well, aiming to offset potential losses if the U.S. economy weakens further.

Meanwhile, Synchrony is tightening its lending standards, reducing exposure to high-risk borrowers. U.S. Bancorp is taking a different route by pivoting toward affluent customers in an attempt to shield its portfolio from rising default risks. These shifts reflect a cautious, forward-looking posture across the sector, even as current spending numbers remain relatively stable.

Consumer Spending Appears Strong But Cracks Are Forming

Despite preparations for a downturn, Americans are still using their credit cards. JPMorgan reported a 7% increase in card spending year-over-year. Citigroup also noted solid growth, though executives admitted the nature of spending has changed. Travel and entertainment have slowed. Essentials are taking center stage.

This contrast between rising card balances and growing caution presents a tricky balancing act for banks and investors alike. Bank of America noted that while spending rose, so did concerns about how long that momentum can last. Capital One, meanwhile, observed that more cardholders are making only minimum payments, a trend typically seen in pre-recession conditions.

A larger concern lies in who is spending. The top 10% of earners now account for nearly half of all U.S. consumer activity. As a result, lenders are increasingly tailoring their products toward higher-income households. That helps protect balance sheets but leaves small businesses and lower-income borrowers with fewer credit options, increasing risk in less affluent segments of the economy.

Should Investors Follow Credit Card Companies and Start Saving for Rainy Days Ahead?

For investors, the moves by credit card companies suggest a few things. First, the credit environment is no longer as forgiving as it was in 2021–2023. The era of loose underwriting is closing fast. Higher delinquencies, while still within historical norms, are trending upward. That erodes profit margins and pressures earnings, particularly for banks with large exposure to mid- and low-tier borrowers.

Second, balance sheet strength is becoming a competitive advantage. JPMorgan and Citi’s large reserve builds indicate that they are positioned to absorb more stress than smaller or regional peers. Investors evaluating these companies will need to weigh capital reserves and liquidity levels carefully, especially as forecasts remain clouded.

For business owners, particularly those reliant on consumer spending, the shift in credit access may already be having an impact. Synchrony reported a 3% drop in active accounts and a 4% drop in purchase volume, directly affecting the retail businesses partnered with its store-branded cards. That decline hints at a potential tightening cycle that could ripple through consumer-facing sectors. The broader risk is that banks’ caution may become self-reinforcing. As lenders tighten standards, some consumers may find themselves locked out of credit, which means reduced spending and, ironically, experiencing the very downturn banks are bracing for.

How should investors respond to the tightening stance of major credit card companies? Tell us what you think!

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