How Have Card Charge-Off Rates For The Largest U.S. Card Issuers Changed In The Last 5 Quarters?

September 15th, 2016 by Trefis Team
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Credit card charge-off rates across banks has seen a noticeable uptick over the last two quarters after remaining at unusually low levels in 2014-15.

Card_QA_ChargeOffChange_16Q2

Individual charge-off figures above are taken from the latest quarterly earnings releases for these card issuers. The weighted average charge-off rate represents the average card charge-off rate for these card issuers as weighed by their outstanding card balances. The average figure for the U.S. card industry is taken from data compiled by the Federal Reserve Bank of St. Louis here.

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Notably, charge-off rates in Q2 2016 for most of these lenders were the highest in 2 years. We believe that the change represents a normalization in charge-off rates after a period of extremely high charge-offs immediately after the economic downturn over 2009-2012, followed by unusually low figures over the last two years. While we expect charge-offs to increase further over subsequent quarters before stabilizing, aggressive card lending policies could raise overall card charge-off rates in the long run.

See the links below for more information about the U.S. banking industry:

Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment/ ask questions on the comment section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to the full Trefis analysis for U.S. Bancorp | Wells Fargo | JPMorgan Chase | Bank of America | Citigroup | Capital One | American Express | Discover

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