Credit Card Defaults and Late Payments Continue Declining

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Credit card defaults and delinquencies have dropped to levels not seen since the start of the Great Recession.

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Credit card defaults and late payments dropped again in April, falling to levels last seen in 2008. Five of the six top credit card companies reported both delinquencies and defaults dropped in April to multi-year lows.

This is another sign of recovery for credit card issuers.

After the economic downturn began in 2008, lenders drastically cut credit limits on millions of cardholders, canceled accounts on their riskiest borrowers, and tightened approval requirements for new customers. Many cardholders have also steadily paid down credit card balances. These changes are all playing a factor in these declining default and late payment figures.

  • Bank of America was the only major issuer that reported a rising default rate in April. The bank’s annualized charge-off rate, which reflects uncollectible balances, was 8.25 percent in April, up from 8.18 percent in March. Bank of America’s charge-off rate peaked at 14.53 percent in August 2009. Late payments dropped to 4.52 percent of balances annualized (the lowest level for the bank since mid-2006), down from 4.82 percent in March.
  • American Express still leads the industry with the lowest rate of charge-offs and defaults. Charge-offs were 3.5 percent of balances on an annualized basis for April, down from 3.7 percent in March. Late payments were 1.7 percent in April, down from 1.8 percent in March.
  • Citi’s default rate was 7.85 percent of balances on an annualized basis, down from 7.89 percent in March. Late payments fell to 3.87 percent in April, down from 4.21 percent in March.
  • Capital One defaults dropped to 4.97 percent annualized. That was down from 5.87 percent in March. Late payments dropped to 3.41 percent of balances, down from 3.59 percent in March.
  • Discover’s charge-off rate was 5.02 percent of balances in April, down from 5.18 percent in March. The delinquency rate dropped to 3.15 percent in April, down from 3.42 percent in March.
  • JPMorgan Chase defaults were 5.6 percent in April, down from 6.02 percent in March. Late payments dropped to 2.86 percent, down from 3.08 percent in March.
Stacy Johnson

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