September 17, 2009
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News: CC Defaults Mixed Results
As expected based on credit card delinquencies last month, JPMorgan Chase & Co., Bank of America Corp, and CitiGroup Inc. three of the nation's largest lenders announced that credit card defaults increased in August. As unemployment climbed o 9.7 percent in August, loan defaults mirrored. Although some analysts say the increase could suggest that previous decreases might have resulted from a temporary increase in consumer funds due to income tax returns. On the other hand, the increase was not unexpected based on a peak in credit card delinquencies a few months back leaving many experts optimistic.
American Express Co. was the only major credit card company to report that both delinquencies and defaults improved over last month. Delinquencies fell to 4.1 percent from 4.2 percent in the previous month while defaults also fell to 9 percent down from 9.2 percent the previous month. On the other side of the spectrum, Bank of America's defaults realized the highest increase in the industry with 14.54 percent up from 13.81 percent for the month of July. Citigroup wasn't far behind Bank of America as the company's loans rose to 12.14 percent up from the previous month at 10.03 percent. JPMorgan Chase, the second largest credit card company fared much better coming in with defaults at 8.73 percent up from 7.92 percent the previous month.
Discover Financial Services, watched credit card defaults rise to 9.16 percent up from 8.43 percent the previous month. Discover has forecasted defaults to be between 8.5 and 9.0 percent for the third quarter. Delinquencies of 30 days or more for the Riverwoods, Illinois based lender rose slightly from 5.28 percent to 5.35 percent. The modest climb is encouraging for Discover. Capital One Financial Corp said its default rate dropped slightly to 9.32 percent from 9.83 percent the previous month while the company's delinquencies of 30 days or more rose to 5.09 percent up from 4.83 percent the previous month.