Synchrony's Credit Numbers Are Improving Even as Inflation Bites. Is the Everyday Consumer Tougher Than Feared?

Synchrony (SYF 0.57%) has been around for a long time, but it only ventured out on its own after being spun off from General Electric following the Great Recession. It provides private-label credit cards to retailers, including industry giants such as Amazon (AMZN +0.55%) and Walmart (WMT +2.90%). There's just one problem: offering store cards often leaves it serving lower-credit-quality customers. Here's what you need to be watching right now.

Synchrony is taking on the financial risk

Working with retailers like Amazon and Walmart is attractive, but they are just two of many companies being served. The bigger story here is that Synchrony is taking on the financial risk of providing revolving credit facilities to customers of many retailers. Retailers want to sell their wares, so they are happy to see credit extended to just about any customer, including those with lower credit scores. Synchrony is happy to oblige because such customers can be very profitable when the economy is strong.

Image source: Getty Images.

When the economy falls into a recession, however, Synchrony's business can come under extreme pressure. With inflation running high, consumers are already tightening their budgets, and the potential for interest rate increases is increasingly being discussed. A recession could be near. This is why investors need to pay close attention to metrics like delinquency rates and charge-offs.

In the first quarter of 2026, the 4.5% 30-day delinquency rate was essentially the same as in the fourth quarter of 2025 and the year-ago period. The 90-day delinquency rate was up slightly from the fourth quarter, but flat with the year-ago period. Net charge-offs, meanwhile, rose slightly from the fourth quarter of 2025, hitting 5.4%. But charge-offs were down nearly a full percentage point from the year-ago figure of nearly 6.4%.

Things are getting better, not worse

For the most part, Synchrony's customers appear to be holding up relatively well. However, the company provides monthly updates on some key data points. The 30-day delinquency rate was 4.3% in April and an even better 4.2% in May. Charge-offs were 5.4% in May and 5.6% in April, remaining at a reasonable level. There's really no sign that the company's customers are facing material financial hardship.

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NYSE: SYF

Synchrony Financial

Today's Change

(-0.57%) $-0.44

Current Price

$76.33

Key Data Points

Market Cap

$26B

Day's Range

$75.34 - $77.93

52wk Range

$63.08 - $88.77

Volume

2.5M

Avg Vol

3.8M

Gross Margin

81.03%

Dividend Yield

1.57%

That makes the recently announced 13% dividend increase and $6.5 billion stock repurchase program look all the more attractive. Wall Street isn't ignoring the company's success, noting that the stock's 7.9x price-to-earnings ratio is above its five-year average of 6.5x. And its price-to-book ratio of 1.7x is above the longer-term average of 1.4x.

Still, investors are paying a premium for Synchrony even as economic risks rise. Conservative investors may want to stay on the sidelines until the economic picture is more clear. More aggressive investors willing to bet that Synchrony's customers can withstand a recession might find it appealing, noting that its retailer-focused approach differentiates the credit card company from its peers.