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Moody's Investors Service this week announced that charge-off rates on prime credit card account receivables hit a new high last month, while delinquency rates softened slightly. Moody's Credit Card Index reached 9.97% last month, which the ratings agency said is consistent with its expectation that charge-off rates will peak in the second quarter of 2010 at about 12%. The delinquency rate for credit card accounts 30 days or more past due declined to 6.34%, down six basis points from 6.4% in March. Moody's attributed the decline to the seasonal effect of consumers receiving income-tax refunds.
Earlier this month, Fitch Ratings Inc. reported that its own index tracking the average charge-off rate on prime credit card receivables rose to 8.89% in April, its highest point to date. The delinquency rate for credit card accounts at least 60 days past due in April was 4.44%, a new peak, Fitch said. But it was the smallest increase in the average credit card delinquency rate in five months, perhaps because of a seasonal trend or "evidence of a nascent trend toward deceleration" of delinquencies, Fitch noted.
Separately, Discover Financial Services CEO David Nelms yesterday told analysts in New York at a conference sponsored by Sanford C. Bernstein & Co. that he expects Discover's fiscal second quarter charge-off rate to be around 8%. That would compare with 6.48% during the fiscal first quarter ended Feb. 28.
Speaking at the same conference, JPMorgan Chase & Co. CEO Jamie Dimon said he expects Chase's second-quarter charge-off rate to reach 9%, consistent with his forecast when the company announced its first-quarter earnings. Chase's charge-off rate on all managed credit card loans (including those acquired with Washington Mutual Inc.) during the first quarter ended March 31 was 7.72%, which compared with 4.37% during the same period a year earlier.
