Credit Card Charge Offs Increase at Major Issuers in August

The annualized charge-off rate for credit card accounts at five of the largest issuers in the U.S. increased in August, according to recent regulatory filings.

Bank of America, Capital One, Citigroup, Discover, and JP Morgan Chase all saw their credit card charge-off rate swell in August after months of declining credit losses. Card delinquencies, meanwhile, dropped at all five banks.

The largest credit card issuer in the U.S., Bank of America, reported the highest annualized charge-off rate for August at 11.73 percent, up from 11.39 percent in July. Citigroup’s 11.18 percent rate was second-highest. Citi also recorded the largest increase in August as its rate jumped from 9.75 percent in July.

But Citi said in its SEC filing that it changed the way it reported charge-offs and credit losses in July, leading to a lower reported rate in that month. The company partially updated the July rate to 9.75 percent an indicated it may further revise the figure.

Capital One enjoyed the lowest charge-offs in August with a 7.77 percent annualized rate.

All five card issuers reported further improvement in delinquencies, a trend that has been realized for most of 2010. All but one lender, Bank of America, reported delinquency rates under five percent in August. JP Morgan Chase reported the lowest delinquency rate at 4.02 percent while Bank of America’s 5.68 percent rate was the highest.

Monthly credit card delinquency and charge-off data is reported by major banks that issue asset-backed securities against the card accounts. The SEC requires monthly performance reports on the assets underlying the securities, with credit card receivables often reported as master trusts. The trusts tracked by insideARM.com represent more than $200 billion in outstanding credit card balances.