With 2021 done, 2022 looms as a landscape of challenge and opportunity for financial services providers.
The recent announcement that the Federal Reserve would look to raise interest rates as soon as next month begs the question of just how ready we are for the great (interest rate) reset.
After all, so much hinges on the Fed Funds rate — typically a benchmark upon which other debt is priced. Credit card interest rates, now in the teen percentage points, will rise.
Scott Sanborn, CEO of LendingClub, noted to PYMNTS’ Karen Webster that the vagaries of the pandemic could make the results of any rate increase look a little different.
According to Sanborn, most recessions have been marked by periods of deteriorating credit. But credit held up well during the 2020 recession and has continued to be strong since then.
LendingClub, he said, is expecting a return to pre-pandemic levels of delinquencies. But the company’s installed base — and target customers — are responsible borrowers. That core demographic, he told Webster, can be defined as individuals earning at least $100,000, with relatively high credit scores, who are grappling with high debt loads.
Many of these individuals, as Sanborn noted, live paycheck to paycheck. Joint research between PYMNTS and LendingClub shows that roughly 40% of people who earn at least $100,000 annually live paycheck to paycheck, at times struggling to make ends meet. This is a key population, said Sanborn, that will look to…
