Techdamentals
Oct 14, 2:57 AM
$DFS Card balances reprice fast, which cuts both ways.
A variable rate tied to prime moves within a statement cycle or two after a Fed move. That lifts interest income quickly, which is the good half.
It also lifts what the borrower owes each month, and that is where credit risk comes from. The Fed raised rates on September 16, the first increase since 2023, and 16 of 18 officials expected at least one more before year end. Citigroup's card profit fell 8% this quarter, partly on more money set aside against card loans.
Full explainer, plain English: https://www.youtube.com/watch?v=hlan3N9D9mU
Educational, not advice.
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