Credit Card Delinquency Rate Trends Southward
For the fourth month in a row, the rate of credit card delinquencies continued to drop throughout the month of April. This clearly indicates that despite unemployment being a concern, there is a stability being seen in consumer finances. The change for better was noticed by five out of the six major credit card companies in the United States.
The measure of the number of customers holding credit cards but not made payments in the last 30 days is called credit card delinquency. This measure is an early indication of the number of loans that may have to be written off by the bank in the near future.
Despite the falling rate of credit card defaults and delinquencies, financial analysts have expressed concern that the growing rate of unemployment will still lead to higher credit card defaults. Some experts also point out that the reason for the reduction in credit card delinquencies could be due to the tax refunds that most customers get in the month of April.
The only bank that reported an increase in the credit card delinquencies was Bank of America where the write-off number stood at 12.71% in April as compared to 12.54% in March. The second on the list was Citigroup that reported the credit card charge-off rate of 11.23% which was actually a decrease as compared to the 11.55% reported in the month of March.
One bank that took pride in the steepest fall of credit card defaults is Capital One. The bank reported a record low default rate of 9.68% in April as compared to the 10.87% in the month of March. The delinquency rate of the bank also fell to 5.07% in April from 5.30% in March.
Another bank that saw a drop in the delinquency rate was JP Morgan Chase. This bank reported a write-off rate of 9.03% in the month of April as compared to the 9.51% in March. The delinquency rate for the bank, which stood at 4.51% in March, fell to 4.4% in April. Discover Card also saw a marginal drop in the delinquency rates. The write-offs stood at 8.42% in April, down from 8.51% in March and the delinquency rate for this bank was reported to be 5.20% in April which is again a drop from the 5.39% reported in March.
The best performer though was American Express that revealed the delinquency rate that was half the rate posted by the Bank of America. A 10% in the write-offs was reported by the bank. The write-off rate that stood at 7.5% in the month on March fell to 6.7 % in the month of April.
