Credit Card Default Rates Up, Down, and Flat in February

Many of the largest credit card issuers in the country recently released their default rate statistics from February 2011.  And, as expected, their default rates were all over the place, showing very little ability to maintain consistency month over month.  Default is generally defined as “noncollectable” credit card debt.  The following is a summary of 5 of the largest credit card issuer’s default rates and trends as summarized from the company’s regulatory filings;

Bank of America – Bank of America’s default rate in February was 8.84% of balances.  While very high historically, it was an improvement over their figure of 9.2% in January and well off their high of 14.53% in August 2009.  8.84% is the lowest the bank has seen since February 2009.  The credit card industry saw a high of 10.97% as recently as Q2 2010.  The news seems like it will continue to get better for Bank of America because their non-default delinquencies (30 days or worse but not in default) is down to 5.09%, which is down from 5.17% in January.

American Express – Amex’s default rate in February was 3.8% of balances, which matches the credit card giant’s performance from January.  American Express’s cardholder base is much more sophisticated, which is why they don’t offer variable rates by credit risk (risk based pricing), except for only a few of their products.  Point being, if you’ve got bad credit you’re not going to get an American Express account.  The news gets better for American Express because their non-default delinquencies (30 days or worse but not in default) is down to 2%, which is down from 2.1% in January.

Chase – Chase’s default rate in February was 6.21% of balances, which is up from their January figure of 5.97%.  The increase is the first in 3 months for the credit card issuer but well off their peak default rate of 10.91% from January 2010.  The news isn’t all bad for Chase.  Their non-default delinquencies are down to 3.29% in February, which is down from 3.39% in January.

Discover – Discover’s default rate in February was 5.79% of balances, which is up from 5.75% in January.  The increase in February was the first such increase in the past 6 months.  Their non-default delinquencies are down to 3.7% in February from 3.84% in January and well off 5.5%, their non-default delinquencies from one year ago.

Capital One – Cap’s default rate in February was 5.91% of balances, which is down from 6.79% in January.  Both figures are well off their default rate high of 10.87% in April 2010.  Their non-default delinquencies are down to 3.83% in February from 4% in January, and well off their peak delinquency rate of 5.8% in January 2009.

Bloomberg and The Associated Press were both sourced for this story.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.