The average U.S. credit card charge-off rate in April likely fell again as it headed toward historic lows, suggest preliminary monthly account-default data from the nation’s top credit card issuers Moody’s Investors Service analyzed.
The number of consumer credit accounts deemed uncollectible in April declined for American Express Co., Capital One Financial Corp., JPMorgan Chase & Co., Citigroup Inc. and Discover Financial Services, while Bank of America Corp.’s charge-offs rose, Moody’s said on May 16.
Moody’s each month analyzes the top issuers’ account-default data and recalculates the information based on its own formula for determining an average industry charge-off rate using consistent measurements. The firm plans to release its adjusted average charge-off rate later this month.
BofA’s charge-off increase in April was “ever so slight” and insignificant within the card industry’s broader trends, says Jeffrey Hibbs, a Moody’s analyst.
“All major credit card issuers are seeing the same degree of improvement in their charge-off rates and delinquency rates, which are a harbinger of future charge-off rates, are also continuing their steady and relentless drive to lower levels,” Hibbs says.
That trend suggests the average U.S. charge-off rate will continue to fall throughout the rest of the year and into 2012, despite occasional upticks among specific issuers caused by “relatively insignificant” aberrations, he says.
“Early-stage delinquencies in March reached an all-time low, and it looks like we are going to see that again in April,” Hibbs says.
The average U.S. charge-off rate on outstanding credit card receivables in March was 7.35%, down 21 basis points from 7.56% in February, while the average account-delinquency rate was 3.79%, down 23 points from 4.02% in February.
