Capital One charge offs top 10%

The number of credit card accounts Capital One Financial Corp. now considers uncollectable rose in December, although fewer customers were falling behind on payments. The McLean-based company, the nation’s third-largest issuer of Visa credit cards, says its charge offs in the U.S. rose to 10.14 percent in December, up from 9.6 percent in November. International credit card charge offs were 9.58 percent in December, while charge offs in the company’s auto finance business were 5.68 percent. The percent of U.S. credit card holders at least 30 days behind on their payments was 5.78 percent, down from 5.87 percent in December. Capital One (NYSE: COF), which reports fourth-quarter results later this month, set aside $296 million in the third quarter to cover potential loan losses. The company still reported better-than-expected earnings, thanks to gains in interest income. [Read the full article]

American Express Co. said Friday that its credit card losses and delinquencies fell in December.

The card issuer said in a Securities and Exchange Commission filing that its annual net write-off rate fell to 7.4 percent at the end of December from 8.1 percent at the end of November. The rate is the percentage of loans the company believes won’t be repaid.

The rate for loans at least 30 days delinquent, an indicator of future loan losses, was 3.7 percent at the end of December, down from 3.9 percent a month earlier.

U.S. credit card data for December showed some signs that fewer consumers were falling seriously behind in their payments.

Four out of six companies reporting credit card activity for December said charge-offs declined in the month.

Delinquency rates, which portend future credit card defaults, declined at all of the companies except JPMorgan Chase & Co (NYSE:JPM – News), according to regulatory filings on Friday.

December was “a point of flux,” said Jason Arnold, analyst at RBC Capital Markets. “If there are two more months of improvement across the board then that’s starting to bode a lot more favorably for trends, but we suspect that that won’t be the case.”

“This is one of those transitional months, and we’ll likely see in coming months as a result of seasonality some weakness … before things get better,” Arnold added. [Read the full article]

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