Growth in the Credit Card Market: JPMorgan Chase Under Scrutiny

The market for credit card services has shown significant growth rates in recent years, driven by an annual growth of 9.2%. The industry is expected to grow from $478.09 billion in 2023 to $522.22 billion in 2024. This positive development is mainly propelled by the use of contactless payments, security concerns, the rise of cryptocurrencies, and personalized financial solutions, and is projected to increase to $717.7 billion by 2028. Simultaneously, changes in consumer preferences and macroeconomic conditions have led to a shift in the credit card market. According to a report, the average credit card debt per borrower increased to $6,360 by the end of 2023, a 10% year-over-year rise. This resulted in a total credit card debt in the U.S. of $1.13 trillion in the same year. Interestingly, households in the 90th percentile owe an average of $11,210, with higher-earning households tending to carry larger debt loads. Credit card usage continues to increase. It is expected that the number of users will rise to 167.2 million by mid-2023, representing a significant increase compared to the last three years. However, there is a trend towards digital payment methods, with less than 10% of Americans using cash payments regularly in 2022. Currently, credit card delinquency rates are gradually rising, reaching 3.1% by the end of 2023, the highest level since 2011. At the same time, credit card charge-offs rose to 4.38% in the second quarter of 2024. The average credit card interest rates were at 27.89% in March 2024, resulting in substantial financial burdens for individuals with debt. Looking ahead, digital payment methods are expected to gain popularity. A survey in August 2023 revealed that more than half of consumers prefer digital wallets over traditional cards, signaling the credit card companies' willingness to innovate despite existing interest rate and debt issues. The U.S. market for digital banking platforms is also growing strongly: it was estimated at $1.04 billion in 2024 and is expected to grow at an annual rate of 9.63% to $2.04 billion by 2031. Credit card spending is anticipated to rise in the mid-single digits in 2024, while credit card balances could decline into the mid to high single digits after a significant increase since 2022. Despite market uncertainties, Piper Sandler has maintained its "Overweight" rating and a price target of $230 for JPMorgan Chase, while Deutsche Bank downgraded the stock from "Buy" to "Hold" but kept the price target at $235. The financial giant remains in focus due to its solid credit quality and higher net interest income. According to a statement from Carillon Eagle Growth & Income Fund, Ken Fisher's Fisher Asset Management holds the largest stake in the company, with 12,740,431 shares valued at $2.58 billion. Overall, JPMorgan Chase ranks third on our list of the best credit card stocks. Although JPMorgan has great potential, some investors see even higher return opportunities in AI stocks.