Latest Credit Card Numbers Show Recovery May Be Slow

October 20, 2009, Written By Lynn Oldshue

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.

The default rates for issuers are still at very high levels. A silver lining can be found in the statistics: 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.

Because issuers cannot continue losing money, they have to find ways to make up the revenue, even if this angers Congress and consumers. Certain 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%

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The information contained within this article was accurate as of October 20, 2009. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Lynn Oldshue

Lynn Oldshue has written personal finance stories for for twelve years. She majored in public relations at Mississippi State University.
View all posts by Lynn Oldshue