Latest Credit Card Numbers Show Recovery May Be Slow
The September performance numbers from credit card issuers show the economic
recovery may not happen as quickly as politicians are predicting.
The delinquency rates--the percentage of accounts where payments are overdue by at least one month--have increased for five of the six top credit card companies when comparing the September rates to August. (American Express reported an identical delinquency rate.)
In addition, the default rates for issuers are still at very high levels. However, the silver lining in the statistics is that five of the six top issuers reported decreases in their default rates in September (only Capital One posted an increase).
These high delinquency and default rates could mean that consumers might continue to see rate and fee increases in the coming months, as well as credit limit decreases on their credit card accounts.
Bank of America has the highest annualized card write-offs (14.25% in September) and payments at least 30 days overdue (7.53% in September). Bank of America CEO Kenneth Lewis said that the company is looking at changes that need to be made in its credit card infrastructure and other ways it can make money. Just last week, Bank of America announced that it is adding an annual fee to select accounts.
"Issuers can't continue losing money. They have to find ways to make up the revenue, even if this angers Congress and consumers," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "To make matters worse for issuers, some fees and rate hikes will be prohibited after certain provisions of the CARD Act goes into effect in February. Congress is also considering changes to the interchange fee."
Here are the delinquency rates by issuer for August and September. These represent the percentage of accounts where payments were at least 30 days overdue (at least 35 days for Citigroup accounts):
August September
Bank of America 7.47% 7.53%
Discover 5.35 5.57
Citigroup 5.38 5.50
Capital One 5.09 5.38
JP Morgan Chase 4.48 4.69
American Express 4.10 4.10
Here are the default rates by issuer for August and September. These are the
annualized percentages of credit card write-offs:
August September
Bank of America 14.54% 14.25%
Citigroup 12.14 10.15
Capital One 9.32 9.77
Discover 9.16 8.69
American Express 9.00 8.40
JP Morgan Chase 8.73 8.12
recovery may not happen as quickly as politicians are predicting.
The delinquency rates--the percentage of accounts where payments are overdue by at least one month--have increased for five of the six top credit card companies when comparing the September rates to August. (American Express reported an identical delinquency rate.)
In addition, the default rates for issuers are still at very high levels. However, the silver lining in the statistics is that five of the six top issuers reported decreases in their default rates in September (only Capital One posted an increase).
These high delinquency and default rates could mean that consumers might continue to see rate and fee increases in the coming months, as well as credit limit decreases on their credit card accounts.
Bank of America has the highest annualized card write-offs (14.25% in September) and payments at least 30 days overdue (7.53% in September). Bank of America CEO Kenneth Lewis said that the company is looking at changes that need to be made in its credit card infrastructure and other ways it can make money. Just last week, Bank of America announced that it is adding an annual fee to select accounts.
"Issuers can't continue losing money. They have to find ways to make up the revenue, even if this angers Congress and consumers," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "To make matters worse for issuers, some fees and rate hikes will be prohibited after certain provisions of the CARD Act goes into effect in February. Congress is also considering changes to the interchange fee."
Here are the delinquency rates by issuer for August and September. These represent the percentage of accounts where payments were at least 30 days overdue (at least 35 days for Citigroup accounts):
August September
Bank of America 7.47% 7.53%
Discover 5.35 5.57
Citigroup 5.38 5.50
Capital One 5.09 5.38
JP Morgan Chase 4.48 4.69
American Express 4.10 4.10
Here are the default rates by issuer for August and September. These are the
annualized percentages of credit card write-offs:
August September
Bank of America 14.54% 14.25%
Citigroup 12.14 10.15
Capital One 9.32 9.77
Discover 9.16 8.69
American Express 9.00 8.40
JP Morgan Chase 8.73 8.12
