Credit Card Charge-Offs Still Troubling

Credit cardsCredit card charge-offs – or loans deemed uncollectible and written off – edged mostly upward in January as reported by the major card issuers, although there is some optimism in the stabilizing of delinquency rates.
Delinquencies – accounts running 30 days late – is generally a harbinger of bad loans to come. Most of the major card issuers either reported modest decreases or little change in the delinquency rates for January compared with December.
But for now, the credit card issuers are mired in write-offs as they face the prospects of reduced revenues from landmark restrictions on interest rate hikes and some fees taking effect on Monday.
JPMorgan Chase, the top general-purpose card issuer, said it wrote off 10.91 percent of credit-card loans last month, up from 7.11 percent in December. Chase had said last month that it projected a jump in write-offs based on a “payment holiday” offered costumers in the first half of 2009, which pushed defaults in the fourth quarter down – and now are bouncing back up.
Citigroup wrote off 9.8 percent, up from 9.56 percent in December. Bank of America again had the highest write-off rate with 13.25 percent in January, but it was lower than its December rate of 13.53 percent.
Capital One said charge-offs in its domestic credit-card unit climbed to 10.41 percent in January from 10.14 percent the previous month.
American Express, the most common card used for purchases, still holds the most robust outlook among its competitors with a 7 percent write-off rate, compared to 7.1 percent in December.
Discover reported charge-offs in January at 8.58 percent of credit-card loans, down from 8.68 percent the previous month.

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