November 16, 2009
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News: U.S. CC Defaults Down For October
The financial industry saw some relief in credit card defaults during the month of October, but delinquencies of 30 days or more increased. Credit card delinquencies are concerning because they predict future defaults. Among the nation's top four, JPMorgan Chase (JPM) fared the best with card defaults coming in at 8.02 percent down from 8.12 percent in September. The bank reporting the highest card defaults for October was Bank of America (BAC) at 13.22 percent down from September's high of 14.25 percent. Discover Financial Services (DFS) credit card defaults came in at 8.54 for October down from 8.69 percent in September. Capital One Financial Corp. (COF) also saw U.S. card defaults drop in October to 9.04 percent from 9.77 percent in September.
Although credit card defaults were down overall for the month of October, the industry's delinquencies of 30 days or more were up slightly. Once again JPMorgan Chase led the pack with an increase to 4.95 percent up from 4.69 percent in September. Discover Financial had delinquencies of 5.72 percent up from 5.57 percent in September. Capital One also had delinquencies at 5.72 percent up from a rate of 5.38 in the month of September. Bank of American again trailing behind with credit card delinquencies in October of 7.59 percent a modest increase from 7.53 percent in September.
Alliance Data, a leading provider of loyalty marketing solutions and provider of private label credit cards reported an increase of card defaults for October at 9.7 percent which is higher than the company's previous ten month average of 9.4 percent. According to the company's release, the average defaults for September and October is in line with the company's expectations. The company's average managed receivables were $4.3 million for October and increase of 11 percent from same time last year. Included in Alliance Data's portfolios are JC Penney, Limited Inc., and World Financial Network National Bank.