Credit card delinquency rates have fallen at major US lenders

[Friday, March 25th, 2011]

The credit card delinquencies have fallen at all major lenders during November since fewer consumers have fallen behind on bill payments.  This signals that there is a recovery from the financial crisis that had crippled the economy.  However, consumers also seem to be avoiding racking up debts on their cards even during the shopping done in the holiday season.  Lenders will have to struggle to overcome the losses and rebuild businesses for a while now.

All the credit card majors such as Capital One Financial Corp, JPMorgan Chase & Co, Bank of America Corp, and Discover Financial Services have said that late bill payments have fallen drastically since November.

The first indicators of future losses are delinquencies, which indicate that the consumers are struggling to pay their bills on time.  The continuous decline in delinquencies in 2011 at the major lenders is a signal that the American citizens have gotten over their worst financial crisis.

The losses had ticked up a bit overall with some of the lenders that includes Capital One, JPMorgan Chase, but they were much lower when compared to their charge-off rates during the beginning of last year.  Normally, losses and loans on the credit cards will rise during the year-end as consumers will want to splurge during the holiday season.  However, they are reluctant to get into debts this year as only 16.3% of the consumers who were part of the poll used their credit cards on Black Friday weekend which is down from 30.9% last year, hitting an all-time low, as per the survey by UBS and America’s Research Group.  Lenders with the US Securities and Exchange Commission file the monthly credit card performance reports.

The largest bank in the US, Bank of America has one of the worst losses in credit cards even now.  However, the rates fell from 10.15% in October to 9.92% during November and over 13% during the start of 2010.  The delinquency rates of the company fell to 5.47% in November from 5.6%.

The end of the spectrum has JPMorgan Chase where the delinquency rates fell to around 3.68% during November from 3.81% in October.  The charge-off rates have gone up to 7.16% in November from 7%.

Discover has also stated that delinquencies have fallen from 4.34% in October to 4.15% in November.  Capital One has also reported a drop in delinquency rates.  AmEx and Citigroup are expected to report their monthly performances on Wednesday.

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