Bailout

Credit Card Charge-Offs Increase

By Anonymous

Capital One Financial Corp (COF.N) and Discover Financial Services (DFS.N) reported that credit-card charge-offs rose in November -- a sign that consumers remain under stress.

In a regulatory filing on Tuesday, Capital One said the annualized net charge-off rate -- debts the company believes it will never collect -- for U.S. credit cards rose to 9.60 percent in November from 9.04 percent in October.

In another regulatory filing, Discover said its charge-off rate rose to 8.98 percent from 8.54 percent after two months of declines.

This graph shows the COF annualized credit card charge-off rate since January 2005.

Notice the spike in 2005 associated with a surge in bankruptcy filings ahead of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

Capital One credit card charge-offs hit 9.83% in July (annualized) - above the peak in 2005 - and were near the peak again in November. It is likely that charge-offs will be above 10% soon.

Update: US Credit Card Charge-Offs Rise in November

JPMorgan Chase ... said charge-offs -- loans the company does not expect to be repaid -- rose to 8.81 percent in November from 8.02 percent in October.
...
Bank of America... said its charge-off rate fell for third straight month -- to 13.00 percent in November from 13.22 percent in October. However, it is still the credit card issuer with the highest default and delinquency rates.

Full post as published by Calculated Risk on December 15, 2009 (boomark / email).