Monday, June 15, 2009

Record Credit Card Default Rate

by Calculated Risk on 6/15/2009 03:52:00 PM

From CNBC: Credit Card Default Rate Hits Record High

U.S. credit card defaults rose to record highs in May, with a steep deterioration of Bank of America's lending portfolio ...

Bank of America—the largest U.S. bank—said its default rate, those loans the company does not expect to be paid back, soared to 12.50 percent in May from 10.47 percent in April.

In addition, American Express ... said its default rate rose to 10.4 percent from 9.90 ...

Capital One said its credit card default rate rose to 9.41 percent from 8.56 percent, while Discover said its charge-off rate increased to 8.91 percent from 8.26 percent.

JPMorgan Chase ... said its default rate rose to 8.36 percent in May from 8.07 percent in April
For the stress tests, the indicative two year loss rate for the more adverse scenario was 18% to 20% for credit cards (around 9% per year). That test might have been too lenient.