Improvements in credit performance are generally continuing on track from 2011 among the top U.S. issuers. Most notable performers in January included Discover and American Express.
Standing out among the pack is Discover Financial Services, which reported a sharp drop in defaults, to 2.75 percent of balances on an annualized basis, from 3.15 percent in December. Discover’s late payments also edged down, to 2.31 percent of balances, from 2.32 percent the prior month.
Only American Express Co. has lower rates, with its January defaults at 2.2 percent of balances and late payments at 1.4 percent.
There is variability among issuers, as well as month to month variations that are to be expected.
Bank of America , Chase and American Express reported lower rates of late payments in January, while Capital One and Citibank both posted upticks in past due by one month or more. But the increases were not substantial, and there is a seasonal factor that typically sends late payments higher in January as card holders try to deal with holiday debt.
2011 enjoyed generally improving delinquencies and charge-off performance among issuers, with some minor upticks late in the year. As noted above, some of this increase is due to seasonality. And some is to be expected as new cohorts of accounts originated in the last 12-18 months mature. Major issuers began a return to account origination in that last year or so, and despite more conservative underwriting, new accounts go through a maturing cycle that can drive new delinquencies and charge-offs.