Consumer Payment Card News

Card Pain

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Credit card losses, a/k/a charge-offs, continued to mount in May, topping 9% for the first time as more consumers deplete their mad money. It is the third consecutive monthly record in the payment card industry’s history. There are already indications that charge-offs will likely head even higher in the third quarter. According to CardData, charge-offs industry-wide for May stood at 6.16%. Earlier this week, Capital One reported that its charge-off ratio rose from 8.56% in April to 9.41% for May, however the figure was about 0.50% lower due to a change in the issuer’s bankruptcy policy. American Express reported its charge-off ratio edged down from a peak of 10.1% in April to 10.0% for May, thanks to the sale of some cardholder loans that had been previously written-off. Discover reported a managed net charge-off rate for the quarter ending May 31st of 7.79%, up 1.31% and 2.80% from the prior quarter and the prior year, respectively. Discover noted that it expects the next quarter to produce charge-offs between 8.5% and 9.0%.

              CHARGE-OFFS
            May 2005: 6.16%
            May 2006: 4.24%
            May 2007: 4.65%
            May 2008: 5.93%
            May 2009: 9.01%
    Source: CardData (www.carddata.com)

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