Although American Express officials crowed about signs of recovery among small business customers, the consumer driven accounts at Capital One could explain the company's more conservative outlook. CEO Richard Fairbank told reporters that he saw a "strikingly low" demand for personal credit cards in 2010, raising concerns that the company's charge-offs had not yet peaked.
Fairbank recently told investors on a company conference call that he expected charge-offs to top off at around 11 percent, mirroring the country's official employment rate. Meanwhile, 30-day delinquency rates among American credit card account holders dropped to just 5.78%. Fewer customers entering a default cycle allows companies like Capital One to shift more resources to marketing and away from emergency loss reserves, company officials said on the call.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.