Tuesday, February 16, 2010

Capital One Credit Card Charge-Offs Increase to 10.41%

by Bill McBride on 2/16/2010 10:36:00 AM

From Reuters: Capital One credit card defaults rise in January (ht jb)

Capital One Financial Corp's U.S. credit-card defaults rose in January, in a sign that consumers continue to remain under stress, it said in a regulatory filing.

Capital One said the annualized net charge-off rate -- debts the company believes it will never collect -- for U.S. credit cards rose to 10.41 percent in January from 10.14 percent in December.
Capital One Credit Card Charge-Offs Click on graph for larger image in new window.

This graph shows the COF annualized credit card charge-off rate since January 2005.

Notice the spike in 2005 associated with a surge in bankruptcy filings ahead of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

Capital One credit card annualized net charge-off rate is now at 10.41% - above the peak in 2005.

As Reuters notes, Capital One is usually the first to report monthly credit card charge-offs. The other major credit card issuers will report later today.

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