Creditnet News Story
Card companies report decline in defaults
Wednesday, November 18, 2009
By Linda McCarthy
However, continued unemployment difficulties may drive up delinquencies.
Recently-released data shows that a number of companies that issue credit card offers saw an improvement in the percentage of charge offs they posted in October.
According to a report from Dow Jones Newswire, the lender with the largest number of charge offs was Bank of America Corp., which reported an annual default rate of 13.22 percent. Though that is high, the number is an improvement on default rates seen by the bank in previous months.
Citigroup Inc. reported that credit card defaults came in at 8.79 percent, down from an annual rate of 10.15 in September.
Though charge offs declined, the numbers posted by card companies indicate that delinquencies are on the rise - a trend which is tied to unemployment. Recently, the U.S. Bureau of Labor Statistics reported that the unemployment rate was at 10.2 percent for October, and many analysts expect it to continue to rise into 2010.
"The latest numbers indicate that consumers remain stressed by high rates of joblessness," Dow Jones reported. "Delinquency rates, a key gauge of future losses, continue to rise for most card issuers, and losses stemming from souring card loans remain elevated."
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