Credit Card Issuers Show Drop in Charge-Offs for May After Spike in April

Four of the five largest credit card issuers in the U.S. last week reported declines for May in their net charge off rates in their securitized card portfolios, according to filings with the SEC.

Bank of America, Capital One, Chase, and Citi saw their net credit losses drop in May. Most reported significant increases in charge-offs in April as debt hangover from the holidays collided with persistent weakness in the labor market and the beginning of a new quarter for the banks.

The average net charge-off rate among the five issuers fell to 4.11 percent in May from 4.37 percent in April. Bank of America reported the highest loss rate at 5.52 percent. Only Discover reported an increase in the month, from 2.6 percent in April to 2.65 percent in May, the lowest rate among the five.

The credit losses, or chargeoff rates, are reported as net of recoveries and collections from the issuers’ gross charge-off rates of accounts securitized for investment.

Delinquencies continued to decline in May, with all five banks reporting decreases in their credit card delinquency rates. The average late payment rate in May was 2.56 percent, a fresh low.

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