Credit Card Charge Offs Decline at Major Issuers in September

The annualized charge-off rate for credit card accounts at four of the five largest issuers in the U.S. decreased in September, according to recent regulatory filings.

Bank of America, Citigroup, Discover, and JP Morgan Chase all saw their credit card charge-off rate drop in September after spiking in August. Capital One was the long issuer that saw its net charge-offs increase, ticking up to 7.89 percent from 7.77 percent in August. Card delinquencies, meanwhile, dropped at all of the banks except for Bank of America, which reported essentially flat delinquencies.

The largest credit card issuer in the U.S., Bank of America, reported the highest annualized charge-off rate for September at 9.99 percent, down sharply from 11.73 percent in August. Citigroup’s 8.99 percent rate was second-highest. Citi also recorded the largest decrease in September as its rate fell from 11.18 percent in August.

Discover enjoyed the lowest net charge-off rate in September with a 7.15 percent annualized rate.

All five card issuers reported improvement in delinquencies, a trend that has been steady for most of 2010. All but one lender, Bank of America, reported delinquency rates under five percent in September. JP Morgan Chase reported the lowest delinquency rate at 3.92 percent while Bank of America’s 5.71 percent rate was the highest.

Monthly credit card delinquency and charge-off data is reported by major banks that issue asset-backed securities against the card accounts. The SEC requires monthly performance reports on the assets underlying the securities, with credit card receivables often reported as master trusts. The trusts tracked by insideARM.com represent more than $200 billion in outstanding credit card balances.