Credit Card Write-Offs Still Troubling as Reform Looms

Gallery.creditcard2Facing a pivotal year ahead with hopes of a turnaround despite looming reform laws, most credit card issuers saw declines in December delinquencies – or the 30-days late rate –  but charge-offs are still troubling.
Another challenging year ahead for the credit card industry includes the implementation of reform laws next month that are expected to hamper profitability with the toughest restrictions yet on when and how to impose interest rate hikes or penalty fees.
American Express continues its relatively robust trend, compared to competitors, with U.S. customers at least a month behind on card payments declining to 3.7 percent in December, from 3.9 percent in November.
Bank of America reported a write-off rate of 13.5 percent, up from 13 percent in November. It had seen declines for three straight months. BofA has had the highest write-off rate among its competitors since at summer.
Write-offs, also known as charge-offs or defaults, are credit card loans deemed as uncollectible. High delinquency rates usually signal higher or relatively high write-off rates to come.
Capital One said charge-offs climbed to an annualized rate of 10.1 percent in December, compared to 9.6 percent in November. Its delinquency rate fell to 5.78 percent last month, from 5.87 percent in November.
Chase, the top credit card issuer, said it wrote off 7.11 percent credit-card loans last month, down from 8.81 percent in November. In the fourth quarter, write-offs totaled 9.3 percent, compared with 10.3 percent in the third-quarter.
Discover Financial Services reported charge-offs in December of 8.68 percent of credit-card loans that have been packaged into bonds, down from 8.98 percent in November. The 30-day delinquency rate fell to 5.49 percent from 5.65 percent in November.

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