Major Credit Card Issuers See Improvement in July

Five of the largest credit card issuers in the country reported lower charge-off and delinquency rates in July just as a separate report verified industry-wide improvement.

Bank of America, Capital One, Citigroup, Discover, and JP Morgan Chase all said that charge-offs and delinquencies fell in their credit card units in July. Citi recorded the largest drop, noting that charge-offs in July accounted for an annualized 9.1 percent of accounts compared to 11.5 percent in June.

Delinquencies also fell in July, according to monthly regulatory filings for major issuers’ master card trusts. Most card issuers and banks have been showing a positive trend for delinquencies over the past few months. All five major credit card issuers reported delinquency rates below six percent in July:

The filings came a week before a Moody’s report showing industry-wide performance improvement.

In Moody’s monthly Credit Card Indices Report, the ratings agency noted that the average delinquency rate for all card issuers fell to 4.93 percent in July, the first time in nearly two years the rate has been below five percent. Likewise, the average charge-off rate fell below 10 percent, to 9.3 percent, for the first time in 14 months.

Moody’s said that it believes credit card losses have peaked and performance will improve from here. But the industry is coming off a lofty peak.

The Federal Reserve reported last week that the average annualized charge-off rate for credit cards hit a record in the second quarter (ended June 30, 2010) (“Credit Card Charge-Off Rates Hit Record High in Q2,” Aug. 24).