Magazine article American Banker

Interactive: Credit Card Chargeoffs Tick Up

Magazine article American Banker

Interactive: Credit Card Chargeoffs Tick Up

Article excerpt

Byline: Harry Terris

The rate at which lenders declare credit card loans uncollectible ticked up at four of the six largest issuers in July from the previous month.

Delinquencies held steady, however, according to reports on securitized receivables published this week. Those results broke with the seasonal increase that typically prevails during the summer, and chargeoffs look poised to retreat in the coming months. (Historical and projected data is shown in the graphics below. Interactive controls are described in the captions. Text continues below.)

Overall, credit card loan performance has grooved into a convincing post-crisis recovery, with loss rates dipping below levels that issuers expect to prevail across the economic cycle.

If the recent pace at which early stage delinquencies, or balances that are past due by between 30 days and 60 days, have been translating into chargeoffs holds, loss rates are set to decline at Bank of America (BAC), Citigroup (NYSE:C), Discover Financial Services (DFS)A and JPMorgan Chase (JPM) in the coming months. (Chargeoffs are the annualized amount of debt written off as a percentage of outstanding receivables.)

No significant deterioration appears in store for Capital One (COF) or American Express (AXP), whose chargeoff rate has already plummeted to 2%, an astoundingly low level for unsecured credit.

(Including domestic card loans that do not back bonds, Capital Oneas chargeoff rate fell roughly a full percentage point from the first quarter to 2. …

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