Credit Card Defaults Continue To Rise

New York, NY, Sept. 16, 2009– Three of the largest credit-card lenders said defaults climbed in August as the unemployment rate increased and the impact of tax refunds lessened.

JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. all said their default rates rose, while American Express Co. was the only one of six card-issuers releasing data to report an improvement in the rate of both defaults and delinquencies, a signal of future write-offs.

The industry’s data may signal that the second quarter’s improvement will be short-lived as tax refunds and federal efforts to stimulate the economy run out.

Bank of America said write-offs rose to 14.54 percent, the highest among the six U.S. lenders reporting today. That compares with 13.81 percent in July, according to a federal filing by the Charlotte, North Carolina-based company.

Citigroup’s defaults rose to 12.14 percent last month, from 10.03 percent, while JPMorgan said write-offs advanced to 8.73 percent from 7.92 percent in July, according to a federal filing.

Credit card defaults usually track unemployment, which rose to a 26-year high of 9.7 percent in August. The jobless rate is expected to peak at more than 10 percent by year-end.

Considering the trend of unemployment and the increase in delinquencies, analysts have estimated credit card losses will keep rising in coming months.