Smart Borrower Blog

Credit Card Delinquencies and Charge-Offs Continue to Show Improvement


Nov 17th, 2010 @ 2:29 PM by Amber Nelson


Although the changes are still incremental, they are in the right direction. Delinquent credit card accounts decreased in October as did credit card company charge-offs for the most part.

Charge-offs are the loans that card issuers basically give up on because the borrowers are highly unlikely to repay them. This means the card issuers take a loss on those accounts and move one. Delinquencies are often a good predictor of future charge-offs, so the fact that both of these moved downward last month is welcome news.

“It’s nice to see that consumers feel more confident in at least being able to pay their other bills,” RBC Capital Markets analyst Jason Arnold said as quoted in an ABC news piece.”We still have a very slow recovery ahead of us, but it’s encouraging to see the seasonal trends being overwhelmed by credit performance.”

The breakdown among banks/card issuers was as follows:

  • American Express – Charge-offs were unchanged at 4.7 percent in October. Its 30-day delinquency rate fell slightly to 2.3 percent from 2.5 percent in September.
  • Bank of America – Charge-offs were actually up to 10.15 percent, from 9.99 percent the month before. Delinquencies were down though to 5.6 percent in October from 5.71 percent.
  • Capital One – Charge-offs fell from an annualized rate of 8.38 percent in September to 7.26 percent in October. Meanwhile its delinquency rate of those 30-day behind on payments, fell to 4.45 percent from 4.53 percent the month before.
  • Citigroup Inc. – Charge-offs moved up to 10.27 percent in October from 8.99 percent due to a one-time change in loss recognition policy.
  • Discover – Charge-offs slipped down to 6.83 percent last month compared with 7.15 percent in September while the 30-day delinquency rate dropped to 4.34 percent from 4.41 percent.
  • JPMorgan Chase – Charge-offs slid to 7 percent from 7.78 percent and total delinquencies inched down to 3.81 percent from 3.82 percent.

Hopefully this represents a shift in consumer behavior toward more financial responsibility. Certainly, a society of more fiscally-sound households will eventual bode well for the greater economy in the long-run.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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