Credit Card Default Rates Rise in January for Capital One

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Capital One Financial

Capital One (NYSE:COF) reported an increase in the rates at which its customers defaulted on credit card balances in January, after seeing a decline in the previous month. Capital One’s total bad debt amounted to $189 million, or 4.08%, of the total loan balance in January, up from 3.98% in December last year. However, the current default rate is significantly below the 6.79% rate which the company reported a year ago. Delinquencies, or payments late by 30 days or more, also increased to 3.78% in January from 3.66% in December 2011. [1]

JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) have also reported a slight increase in their default rates in January, compared to December 2011 while Bank of America (NYSE:BAC) saw a decline.

Discover Financial (NYSE:DFS) reported a sharp decline in default rate to 2.75% of balances in January on an annualized basis, from 3.15% in December. Discover’s late payments also declined to 2.31% from 2.32%. The average default rate among the top five card issuers was 4.26% in January 2012, down from 4.45% in December and 6.97% in January 2011. [2]

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Notes:
  1. Capital One Jan. default, late payment rates rise, Feb 15, 2012, Business Week []
  2. Credit Card Defaults Mixed, But Overall Trend Positive, eCredit Daily, Feb 17, 2012 []