Credit Card Gist

Capital One reported Thursday that its net charge-offs in the U.S. declined for a third-straight month, despite stubbornly high unemployment. Charge-offs are loans lenders do not expect to collect and write off their books as losses, typically 180 days after the last payment on the account. Moreover, the issuer reported lower levels of late payments in June, seen as another signal that the industry may have turned a corner after credit card companies suffered record losses in the aftermath of the financial meltdown.

Capital One reported in its monthly filing with the U.S. Securities and Exchange Commission a charge-off rate at its U.S. card business of 9.28 percent in June, down from 9.48 percent in May. Internationally, however, the bank’s charge-offs rose to 8.29 percent from 8.21 percent.

Capital One’s 30-day delinquency rate in the U.S., measuring payments late by 30 days or more, decreased to 4.79 percent in June from 4.8 percent in May. The issuer’s international delinquency rate also dropped last month – to 6.03 percent from 6.08 percent.

(Via Google.com)

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Three-quarters of Americans say their debt has not increased over the past six months and 38 percent report their debt has actually decreased, according to the latest American Express Spending & Saving Tracker. Close to a half of consumers (46 percent) say they have been focused more on paying down debt than saving (29 percent) this year and 57 percent report they have a specific plan to reduce or stabilize their debt.

While focusing on keeping debt in check, consumers are lowering their savings goals, according to the report. At the beginning of the year consumers aimed at saving an average of $14,000. The figure now is $12,000. However, over the first six months consumers have only managed to save 25 percent of their savings goal.

For the 51 percent of U.S. consumers who report being behind on their savings goal for 2010, the key reasons are:

• Increase in cost of non-discretionary bills such as utilities, groceries and auto – 58 percent.
• Unanticipated emergencies – 30 percent.
• Difficulty balancing wants versus needs – 20 percent.
• Buying on impulse – 20 percent.
• Spending outside their means – 17 percent.

(Via AmericanExpress.com)

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Discover Financial Services, the fourth-biggest U.S. credit card payments network, reported Thursday its earnings surged by 14 percent in the second quarter as credit card spending rose to a record level and charge offs fell more than anticipated.

Discover’s net income for the three months ended May 31 was $258.1 million, or 33 cents a share, up from $225.8 million in the same period last year, including a $295 million gain from a legal settlement, the bank reported.

Credit card spending increased 6 percent to a record $22.9 billion, while charge offs were reported at 7.97 percent in the quarter, a lower-than-expected increase from 7.79 percent from a year earlier and a significant improvement from 8.51 percent in the previous quarter.

More Discover cardholders were paying their bills on time, the issuer reported. Discover’s 30-day delinquency rate dropped in the second quarter to 4.52 percent, down from 5.08 percent a year earlier and 5.05 percent from the first quarter.

(Via WSJ.com)

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).

Citibank’s credit card charge-offs dropped slightly in May, the bank reported in a regolatory filing on Tuesday. Fewer cardholders made late payments on their cards, an indication that the bank will see fewer defaults as the year progresses.

Citi reported it charged off 11.16 percent of its credit card balances last month, down seven basis points from 11.23 percent in April and 11.55 percent in March. Citibank’s rate remained the highest in the industry by far. The other large issuers, like Capital One, Discover and JPMorgan Chase reported charge-off rates between 8.92 percent and 9.48 percent.

Charged-off are credit card balances on which issuers have not received payments for at least 180 days. Such balances are written off the issuer’s books as losses.

Citi’s 30-day delinquency rate, measuring the rate of credit card payments that are late by 30 days or more, fell more noticeably in May – to 8.42 percent, down from 9.02 percent in April and 9.14 percent in March. However, Citi’s competitors reported much lower delinquency rates for the month – between 4.2 percent and 4 percent.

(Via Google.com)

American Express reported in a regulatory filing submitted to the Securities and Exchange Commission that 2.9 percent of its credit card loans were at least 30 days past due in May, down from 3.1 percent in April and 3.3 percent in March.

The 30-day delinquency rate is a key indicator of future loan losses. The improvement of the rate indicates that customers are getting a handle on their finances in a weak economy.

American Express had $49.5 billion in total loans as of May 31, compared with $48.9 billion on April 30, according to the report.

AmEx’s charge-offs also fell – to 6.3 percent from 6.7 percent in April and 7.5 percent in March. Charged-off are credit card loans the issuer does not believe will be repaid. Typically, charge-offs are written off the issuer’s book as losses at 180 days after the last payment on the account.

(Via Nasdaq.com)