Monday, March 15, 2010

Capital One Credit Card Defaults decline, BofA defaults increase

by Bill McBride on 3/15/2010 10:56:00 AM

From Reuters: Capital One Credit Card Defaults Fall, but BofA's Rise

Capital One said the annualized net charge-off rate — debts the company believes it will never collect — for U.S. credit cards fell to 10.19 percent in February from 10.41 percent in January. ...

However, Bank of America said its defaults rate rose in February, up from 13.25 percent in January to 13.51 percent.
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 - to 9.75% - associated with a surge in bankruptcy filings ahead of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

Capital One's credit card annualized net charge-off rate is now at 10.19% - down slightly from January, but still above that spike in 2005!

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