Credit Card Delinquencies & Charge-Offs Continue to Fall
Consumers continue to pay their credit card bills on time, and issuers are having to write off fewer accounts. Both delinquencies and charge-off rates declined from April to May for five of the six top credit card issuers.
Delinquency rates represent the percentage of credit card accounts which are at least 30 days overdue.
American Express was the only issuer where late payments stayed flat at 1.1 percent in both April and May. Amex, which has a high percentage of affluent customers, has one of the lowest delinquency and net charge-off rates in the industry. Its net charge-off rate declined from 2.1 percent in April to 1.9 percent in May.
Discover was the lone major issuer to have an increase in its charge-off rate in May. The issuer wrote off 1.95 percent in May compared to 1.94 percent in April. Discover’s delinquency rate fell from 1.65 percent in April to 1.58 percent in May.
Capital One’s delinquency rate for U.S. card loans dropped from 3.14 percent in April to 2.97 percent in May. The charge-off rate fell from 4.61 percent in April to to 4.17 percent in May.
Bank of America saw its delinquency rate drop from 2.72 percent in April to 2.60 in May. Its net charge-off rate fell from 4.55 percent to 4.03 percent.
The delinquency rate for Citigroup fell from 3.11 in April to 3.00 in May. The charge-off rate fell from 2.10 percent in April to 1.98 percent in May.
The delinquency rate for J.P. Morgan Chase declined from 1.70 percent in April to 1.60 percent in May. Its net charge-off rate fell from 3.49 percent in April to 3.34 percent in May.
Some of this decline is due to the actions of the credit card issuers and banks. They slammed on the lending brakes once the financial crisis took place, reducing their risk in credit card loans. They lowered the credit limits on millions of accounts, canceled others and tightened their lending standards, focusing on consumers with above-average credit scores.
Consumers have also done a better job paying their credit card debt and charging only what they can afford to pay off in a more timely manner.