June 17, 2010
-
News: Citi Tops Industry On CC Defaults
Over the past 18 months, credit card companies have felt the pains of cardholders losing their jobs during the worst recession since the Great Depression. Recent reports from lenders have been optimistic as the rate of credit card defaults and delinquencies begin to slow down. Citigroup Inc. was one bank that was hit hard by crisis. However, in a more positive release, Citigroup reported that in May credit card defaults fell slightly. Although the bank's defaults remained the highest among the nation's top lenders, its card defaults fell to 11.16 percent in May, down from the previous month of April of 11.23 percent.
In comparison to its main competitors, Citi faired very poorly with credit card defaults. The lender was nearly one and a half percent higher than its next highest competitor. Most of the nation's top card companies reported credit card defaults between 8.92 percent and 9.48 percent, including Capital One, Discover, and JPMorgan Chase. For clarification purposes, lenders write off loan balances that are 180 days or more past due; however, if the cardholder pays the debt off in the future, lenders are able to claim that as income. During 2009 and the first half of 2010, across the board, lenders have written off record breaking numbers of loans. Overall, U.S. card issuers have written off over 10 percent during the first fiscal quarter of 2010 compared to 9.5 percent the previous quarter of 2009. The number is huge in terms of the average defaults prior to the recession. During the second quarter of 2007, the card industry defaults amounted to 3.8 percent.
On a more positive note, Citi reported that its early stage credit card delinquencies of 30 days decreased to 8.42 percent in May; down from 9.02 percent in April. Once again, Citi fared worse than its competitors who reported early stage delinquencies rates between 4.2 percent and 4 percent for May.