February 16, 2010
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News: Card Companies Still Feeling The Crunch
The latest statistics released by credit card companies indicated that Americans are continuing to be burdened by high delinquencies and unemployment. Capital One, JPMorgan Chase & Co., and Citigroup all had an increase in credit card defaults for January. Capital One's rose to 10.41 percent up from 10.14 percent in December; JPMorgan Chase reported 10.91 percent in write-offs for January, up from 7.11 percent the previous month. Citigroup reported 9.8 percent in credit card defaults for January, up from 9.56 percent in December. Although Bank of America suffered the greatest losses with write-offs of 13.25 percent in January, the bank improved slightly from the 13.53 percent in December.
Discover Financial and American Express both experienced a reduced rate of credit card defaults in January. Discover reported write-offs at 8.56 percent, down from December's 8.68 percent. American Express, the top performer throughout the credit crisis, reported defaults at 7.0 percent in January, down slightly from 7.1 percent in December. Discover Financial and American Express are unique in that they not only lend credit card funds; they process financial transactions as well.
Credit card delinquencies of at least 30 days or more have also risen slightly during January indicating that defaults have not yet peaked. Delinquencies typically predict the amount of defaults a lender can expect over the next three months. Capital One reported delinquencies up to 5.8 percent in January from 5.7 in December while Discover reported delinquencies rose to 5.55 percent up from 5.49 percent in December. American Express again the leader, reported card delinquencies of 30 days or more declined to 3.6 percent in January from 3.7 percent in December.
As Americans and lenders continue to deal with the stress and pressures of a difficult economy, new credit card legislation that comes into effect next week will surely impact the nation. As lenders threaten that the new laws will only serve to hurt the consumer by limiting credit, Americans are hoping for relief from strong arm lenders and high interest rates.