U.S. Credit Card Defaults Fall to 18-Month Low

Americans continued to pay their credit card bills on time in September, according to the latest Credit Card Index results from Fitch Ratings, a rating agency. Credit card defaults, as well as early- and late-stage delinquencies have all dropped, while the monthly payment rate remained high.

Credit card defaults, or charge-offs, fell 1.14 percent to 9.22 percent, the lowest level in 18 months. Most big issuers reported lower default rates in September. Banks charge off credit card balances they no longer believe will be repaid, typically 180 after the last payment on the account. September’s charge-off rate is still high by historical standards and is likely to remain high until the employment situation begins to improve.

Early-stage delinquencies — payments late by 30 days or more — dropped by only 0.01 percent to 4.61 percent, according to Fitch. Late-stage delinquencies — payments late by 60 days or more — fell by 0.06 percent to 3.50 percent, their lowest level in two years.

Here are the figures from the major credit card companies:

• JPMorgan Chase’s 30-day delinquency rate — payments late by 30 days or more — fell to 3.82 percent in September from 3.89 percent in August. Its charge-offs fell 0.40 percent to 7.78 percent from 8.18 percent during the same period.
• Bank of America reported a 30-day delinquency rate of 5.71 percent in September, up from 5.68 percent in August. The Charlotte, N.C.-based bank’s charge-off rate dropped to 9.99 percent in September, down 1.74 percent from 11.73 percent during the previous month.
• Citibank said its 30-day delinquency rate in September was 4.93 percent, down from 4.95 percent the previous month. The New York-based bank charged off 8.99 percent of its balances, down 2.19 percent from 11.18 percent in August.
• Capital One’s 30-day delinquency rate dropped slightly to 4.53 percent in September from 4.56 percent in August. The bank’s annualized charge-off rate was 8.38 percent, up from 8.19 percent during the same period.
• Discover reported a 30-day delinquency rate of 4.41 percent in September, down from 4.47 percent during the previous month. Its charge-off rate totaled 7.15 percent of credit card loans that have been packaged into bonds, down from 7.98 percent in August.
• American Express continued to lead its peers in both categories. The New York-based company reported a 30-day delinquency rate of 2.5 percent in August, up slightly from 2.4 percent in August. AmEx’s charge-off rate fell to 4.7 percent from 5.5 percent in August.

The rate at which consumers are repaying their credit card debt, the monthly payment rate (MPR), fell to 19.65 percent in September from 19.80 percent in August, but it still is the third-highest level since the beginning of 2008, according to Fitch.

Overall, since the end of 2008, four of the largest issuers have charged off 14 percent or more of their account balances, according to Fitch. In each of the past nine months, credit card companies have reported lower levels of late-stage delinquencies, reaching 3.5 percent in September, slightly below the 10-year average.

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