Weekly Credit Card Update April 16, 2010
FEWER AMERICANS FALLING BEHIND ON CREDIT CARDS
Credit card delinquency rates fell last month at major U.S. lenders, including Bank of America Corp and JPMorgan Chase & Co, in the latest sign that Americans are starting to climb out of the recession.
On the downside, credit losses from noncollectable loans were still high, and worsened for JPMorgan, Capital One Financial Corp and American Express Co, according to regulatory filings by the companies on Thursday. And credit losses for many lenders were up from a year earlier.
But delinquencies are a better gauge of future loan performance, and with fewer consumers late on their bills, the outlook for credit losses over the summer may be improving.
American Express continued to exhibit some of the most improving credit trends, as its delinquencies decreased from 3.6 percent over the previous two months to 3.3 percent in March. Its charge-offs increased slightly, from 7.4 percent in February to 7.5 percent in March, but remained among the lowest in the sector.
Bank of America said in a regulatory filing Thursday that its credit card charge-off rate fell in March by almost a full percentage point from February, to 12.54 percent. Delinquencies fell to 7.07 percent from 7.23 percent.
JPMorgan said its charge-off rate increased to 9.51 percent in March from 9.21 percent in February. But its delinquency rate continued to decline, from 4.75 percent in January and 4.67 percent in February to 4.51 percent in March.
Story by Maria Aspan for Reuters
CREDIT CARDS UNDERGOING CHANGES AROUND THE WORLD
The United States is not the only country that experienced a credit meltdown or government regulations for the credit card industry. Other countries are going through similar situations. Here is summary of the credit card changes taking place in other parts of the world.
BUREAUS GO BEYOND THE CREDIT FILE
Recognizing that a prospective borrower’s payment history is just the beginning, the three major credit bureaus are widening the types of personal data they can provide banks, in an effort to strengthen financial firms’ ability to properly assess loan candidates. Borrowers’ income and assets are “going to be more of an indication of their ability to repay than just the credit report,” said A.R. Smith, the president of American Home Bank in Mountville, Pa., a division of First National Bank of Chester County.
Today, with lenders’ renewed focus on conservative underwriting and desire to resume more robust marketing efforts, especially of credit cards, the bureaus are revamping their data offerings. Equifax Inc., Experian PLC and TransUnion LLC, along with score provider Fair Isaac Corp., are creating services that give lenders a more holistic view of the customer, including how much money a consumer makes and how much he or she is worth.
Opportunities exist in the high and low ends of the credit score spectrum, Greene said. The challenge is distinguishing which borrowers in each segment can take on more credit. “Two individuals with the same score might have a different capacity to take on more debt,” he said.
Income Insight provides lenders an estimate, rounded to the nearest thousand, of an individual’s income based on his or her credit report. The model can be applied to nearly any individual for which the bureau has a report.
A separate service, called Income View, is a Web-based tool that enables lenders to access verified income information from the Internal Revenue Service.
Story by Sara Lepro for American Banker
MONITORING SITES DRAW CREDIT ‘HYPOCHONDRIACS’
Tighter lending by banks and tough economic conditions have raised awareness among consumers about the importance of credit reports and credit scores in determining the interest rates lenders set for them.
JP MORGAN PROFIT RISES 55%
JPMorgan Chase & Co., beat analysts’ estimates because first- quarter earnings rose 55 percent on higher trading revenue. Fee income has helped offset loan losses in mortgage lending and credit cards.