Personal Finance Credit card late payments edge higher in Sept.

By Eileen AJ Connelly AP Personal Finance Writer NEW YORK (AP) -- In what may be an early sign that credit card users are again having trouble paying their bills, five of the nation's top six credit card issuers said Monday that late payments rose in September. That's the first month since February 2009 that so many major companies reported upticks in payments late by 30 days or more. The increases all were smaller than a percentage point, and card companies have seen small increases in delinquency in individual months during the last two years. But the broader trend has been for vast improvements in payment habits that have brought delinquency rates down to historic lows. So it is worrisome that more people appear to be falling behind, especially with unemployment remaining above 9 percent and some economists predicting another recession. Analysts generally expect improvements in delinquencies and defaults to level off as the year draws to a close. The biggest increase reported Monday was at Capital One Financial Corp., which saw delinquencies rise to 3.65 percent of balances on an annualized basis, from 3.43 percent in August. At American Express Co., delinquencies accounted for 1.5 percent of balances, up from 1.4 percent the month before. That's the lowest delinquency rate in the industry. Discover Financial Services' rate, which was 2.5 percent, also rose just one-tenth of a percentage point, while Chase, the nation's largest card company by spending volume, posted a rate of 2.53 percent, up from 2.48 percent. Bank of America's highest-in-the-industry rate rose to 3.99 percent from 3.96 percent. Citibank's card division had not yet reported its September results Monday evening. Even as their delinquencies rose, all of the banks had lower default rates for September than August, reflecting the broader trend for the industry since mid-2010. Bank of America had the highest default rate reported Monday, at 5.99 percent of balances annualized. Amex had the lowest, at 2.3 percent. Federal Reserve data show that, at its highest, the industry-wide card default, or charge-off, rate, hit 10.96 percent of balances in 2010's second quarter. It was 5.6 percent in this year's second quarter, the latest period for which complete data is available. Should the September uptick be the start of a broader trend, two factors would likely temper the impact on banks. First, fewer people have credit cards today than at the start of the Great Recession in 2007. The number of U.S. credit accounts issued by banks under the MasterCard and Visa brands dropped about 30 percent by mid-2011, to 343 million, from 488 million at the end of 2007. American Express and Discover do not make public the number of accounts their customers have, but both have reputations for strict management of problem accounts. Many of those accounts may have been held by people with more than one credit card. But credit reporting agency TransUnion estimates about 8 million individuals dropped out of the credit card market altogether last year, either by choice or because their accounts were shut down. Those accounts that remain open have lower credit limits, as well, after banks pared back the amount they were willing to lend even to borrowers with top credit ratings. The second factor limiting the impact on banks of rising delinquencies is that balances have fallen sharply, to $790.1 billion in August from a peak of $972.1 billion three years earlier. So, even if more consumers can't pay their bills, banks have less to lose than they did the last time delinquencies started to climb. Published: Wed, Oct 19, 2011