Credit Card Gist

Charge-offs among prime-rated U.S. credit card borrowers declined in June, compared to the same period last year, for the first time January 2007, according to a report released by Fitch Ratings, a New York City-based credit rating agency. 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.

Fitch’s prime credit card charge-off index also fell on a month-to-month basis – to 10.57 percent from 11.13 percent in May. Most of the largest credit card companies, including Bank of America, Chase, Capital One and Discover, reported lower charge-off levels in June.

The consumers’ monthly payment rate (MPR), measuring the proportion of the outstanding balance paid by cardholders at the end of each monthly cycle, also improved. The MPR rose to 19.61 percent, up 0.59 percent from May and 14 percent from a year ago, reaching its highest level in 29 months.

Late payment levels are also improving, according to Fitch, falling below 4 percent for the for the first time in 18 months. Late-stage delinquencies, measuring payments that are 60 days late or more, fell 0.15 percent to 3.86 percent, the sixth monthly decrease in a row. The early-stage delinquency rate, measuring payments that are late between 30 – 59 days, fell 0.14 percent to 5.13 percent, its fourth consecutive monthly decline.

(Via FitchRatings.com)

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Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
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U.S. credit card companies losses decreased for the third month in a row in June, according to a report by Moody’s Investors Service. Additionally, the losses decreased on a year-over-year basis for the first time since the end of 2006, the data revealed.

June’s charge-off rate was at 10.3 percent, down from 10.7 percent in May and 10.8 percent a year earlier. Charge-offs are loans lenders do not expect to be repaid. Issuers typically write off such loans as losses 180 days after the latest payment on the account.

The rate of credit card delinquencies also went down in June. Measuring the proportion of payments late by 30 days or more, the delinquency rate is a good indicator for future losses. In June, the 30-day delinquency rate stood at 5.08 percent, the lowest monthly rate since November 2008.

Although the early-stage delinquency – measuring payments late between 30 – 59 days – was virtually flat in June, which probably means that it would rise in the fall, “overall, compared to a year ago, delinquency trends are clearly improving across the industry and are consistent with our expectation for lower charge-off rates in the months ahead,” says analyst Jeffrey Hibbs.

(Via WSJ.com)

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

American Express tripled its income in the second quarter, the biggest U.S. credit card issuer by volume reported in a regulatory filing Thursday. AmEx said its second-quarter net income was $1.02 billion, or 84 cents a share, up from $337 million, or 9 cents a share, in the same period a year ago.

Cardholders increased spending by 16 percent in the quarter, to $175.3 billion. The average spending was $3,288 per account, up 21 percent from a year ago. AmEx set aside $652 million for future loan losses, down 59 percent from the $1.6 billion loss provision a year ago.

American Express had the lowest delinquency rate among the six biggest U.S. credit card issuers in June. Payments late by 30 days or more fell to 2.7 percent of outstanding balances.

The issuer’s charge-offs – loans it does not expect to be repaid – fell to 5.7 percent in June to their lowest level since the economic crisis began. Just a year ago AmEx’s charge-off rate stood at 10 percent. Charge-offs are typically written off as a loos at 180 days after the latest payment on the account.

Unlike Visa and MasterCard issuers, American Express will not be affected from the legislation regulating interchange fees for debit card transactions, because it doesn’t issue debit cards or process debit transactions.

(Via Google.com)

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Capital One reported its net income in the second quarter was $608 million, or $1.33 per share, versus a net loss of $277 million, or $0.66 per share, a year ago. The bank’s quarterly revenue was $3.9 billion, up 25 percent from the $3.12 billion a year ago, but down 9 percent from the previous quarter.

Capital One’s net U.S. charge-offs – loans the lender does not expect to be repaid – fell to 9.28 percent on an annualized basis in June, down from 9.48 in May. Payments delinquent by 30 days or more accounted for 4.79 percent of total balances, according to the bank’s regulatory filing.

The bank’s net interest income was $3.1 billion, up from $2.95 billion in the same period a year ago. However, it was down from $3.23 billion in the first quarter of the year.

(Via YouTube.com)

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

The latest reports from U.S. credit card companies show that less Americans were behind on their credit card payments in June, even as the economic recovery remains tenuous and unemployment rates show no signs of improving.

Credit card delinquency rates have been declining throughout the industry since the start of the year and June was not an exception. Yet, there were some signs of concern with the reports from two major issuers that could indicate that the trend could reverse.

Capital One’s 30-day delinquency rate, measuring the proportion of cardholders late on their payments by 30 days or more, did go down, but only by one basis point – from 4.8 percent in May to 4.79 percent in June.

Citigroup’s delinquency rate dropped more substantially – from 5.59 percent in May to 5.44 percent in June – the lowest level of the year. The bad news, however, was that Citi’s net charge-offs rose to 11.46 percent in June, from 11.16 percent in May. Charge-offs are loans that lenders do not expect to collect and write off their books as losses, typically 180 days after the latest payment on an account.

All other major issuers, including Chase, Bank of America and American Express reported improved rates for both their delinquencies and charge-offs. BofA reported the biggest drop in charge-offs – to 11.98 percent from 13.33 percent in May – and in late payments – to 6.16 percent in June from 6.39 percent in May.

(Via Reuters.com)

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).