Credit-card companies brace for a downturn

The largest credit-card companies are preparing for the economy to get worse.

- Imani Moise

An economic downturn could mean more customers can't pay their bills, and banks and credit card companies are trying to get ahead of it, according to their latest earnings reports. Already, delinquencies are rising and are now in line with levels from before the pandemic.

JPMorgan Chase and Citigroup added money to their rainy day funds to cover expected future losses. Retail-card issuer Synchrony is tightening its lending standards. U.S. Bancorp is chasing a more affluent customer base that could better withstand a downturn.

The effects of President Trump's trade war haven't yet shown up in the financial results of the largest lenders, whose businesses provide a window into Americans' spending habits. These firms reported higher profits in the first three months of the year, before Trump rolled out his most severe tariffs. Americans continued to spend, borrow and open new credit cards at a faster pace than a year earlier.

"The focus right now is on the future, which is obviously unusually uncertain," JPMorgan Chase finance chief Jeremy Barnum said on a call with analysts.