Nonbanks are becoming more active in the subprime card market as many banks remain hesitant to expand in this space. While they represent more risk, subprime borrowers pay higher interest charges that can result in bigger returns for lenders in a strong economy. Most of the credit-card balances sold in this deal weren’t delinquent, said people familiar with the matter. Thirty-day delinquencies hit 2.6% in the fourth quarter, up from 2.2% a year prior, while 90-day delinquencies reached 1.3%, up from 1.1%, according to Barclays’ latest earnings report. Several large lenders also recently reported jumps in charge-offs, which are unpaid balances that lenders write off as losses when they don’t expect borrowers to pay them. Card defaults, while still near record lows, have been on the rise recently. Subprime card issuance has been on the rise in recent years, partly as some banks have grown more comfortable taking on more risk and some nonbank lenders enter the card market for risky borrowers.Īt the same time, there is growing anxiety among investors and some lenders that a turn in the credit cycle could be near and that losses could soon rise. Several executives at Credit Shop were previously with Barclaycard.

as an investor, is planning on launching its own credit card later this year, according to people familiar with the matter. The firm, which launched in 2013 and counts Chinese firm Renren Inc. The deal marks the first time that Austin, Texas-based Credit Shop, which is mostly focused on extending personal loans to near-prime and subprime borrowers, purchased credit-card accounts and balances. The credit-card issuer, a unit of British bank Barclays PLC, sold $1.6 billion of credit-card balances owed by mostly near-prime and subprime borrowers to privately held personal-loan firm Credit Shop Inc., according to people familiar with the matter. economy and the wisdom of wagering on risky borrowers. Barclaycard is shedding a chunk of its subprime card balances, in a deal that reflects diverging views in the card industry about the future of the U.S.

Baycard account