Credit card charge-offs or loans assumed uncollectible and written off edged higher in January as reported by the major card issuers, although there is some positive expectation in the stabilizing of delinquency rates.
Delinquencies are the accounts running 30-days late . It is generally a precursor of bad loans to come. Several major credit card issuers reported eithera modest decline or little change in the delinquency rates for January compared with December.
The credit card issuers are stuck right now in write-offs as they face the possibility of reduced revenues from landmark restrictions on interest rate hikes and some charges taking effect on Monday.
The top general-purpose card issuer, JPMorgan Chase, said it wrote off 10.91% of credit-card loans last month, up from 7.11% in December. Last month, JP Morgan Chase reported that it forecasted a jump in write-offs based on a "payment holiday" offered to customers in the first half of 2009, which pushed defaults in the 4th quarter down - and now are bouncing back
up.
Citigroup wrote off 9.8%, up from 9.56% in December. Bank of America again had the highest write-off rate with 13.25% in the month of January, but it was lower than the rate in the month of December which is 13.53%.
Capital One said that charge-offs in its household credit-card accounts climbed to 10.41% in January from 10.14% the previous month.
American Express, the most common card used for most purchases, still holds the most robust outlook among its competitors with a 7% write-off rate, compared to 7.1% in December. Discover declared charge-offs in January at 8.58% of credit- card loans, down from 8.68% the previous month.
VIA Credit Daily
Keyword: Credit Card
