(Source: USA TODAY) - The nation’s top credit card companies on Monday reported mixed progress in reducing the rate at which customers default on their accounts. Higher monthly default rates at Bank of America and Citigroup offset improvements for most other major card issuers.Analysts said July’s mixed results, along with the recent slowdown in the economic recovery, are unlikely to jeopardize a two-year trend of declining default rates.
Most card issuers reported that fewer customers were behind on monthly payments in July. This should lead to fewer defaults late this year.
The higher default rates at Bank of America and Citi “are just monthly noise,” Moody’s analyst Jeff Hibbs said. “The overarching trend of improvement across the industry continues.”
Three of the six top card issuers reported lower default rates in July, compared with the previous month. In terms of late payments, four of six had lower delinquency rates.
Bank of America continues to have the highest default rate among six major card issuers, but it is down substantially from the 14.5% the bank reported in August 2009.
Citibank, the card division of Citigroup, said its default, or charge-off rate, rose to 6.6% annualized for July, up from 6.5% in June, snapping a four-month string of decreases.
As with Bank of America, Citibank’s delinquencies fell: Payments late 35 days or more dropped to 3.4% in July from 3.6% in June.
That rate has returned to levels that Citibank hasn’t seen since the recession began in late 2007.
Chase, the card division of JPMorgan Chase, and the nation’s largest card issuer, said its default rate in July fell to 4.8% of balances, from 4.9% in June. The July rate is Chase’s lowest in nearly three years.
Discover Financial Services said its customers defaulted last month at the lowest rate since before the recession: 3.8% compared with 4.0% in June.
American Express said its lowest-in-the-industry default rate rose to 2.8%, up from 2.7% in June.
Capital One’s defaults fell to 3.8% of balances on an annualized basis, from 4.4% in June.
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A service of YellowBrix, Inc. Publication date: 2011-08-16
Source: USA TODAY