Citigroup reports an increase in the number of defaulted credit card payments in August 2011, the second month in a row that Citibank has seen this figure rise. At the same time, the rate of late payments to Citibank credit cards fell.
Citibank defaults on the rise
Citibank is known for its range of credit card rewards and premium credit card deals. The bank's credit card branch is currently reporting an annualized 6.92 percent of balances that have defaulted in August, a significant jump over the July 2011 rate of 6.64 percent.
From March through June 2011, Citibank saw a decrease in its number of credit card defaults, which makes these two months of higher rates surprising. However, Citi does report a simultaneous decrease in its percentage of late payments - from 3.39 percent in July to 3.35 percent in August - which may indicate that the default rate will soon drop off again.
Citibank's highest default rate historically was 12.14 percent in August 2009, in the height of the economic recession.
Other banks see default rates dropping
At the same time that Citi has seen defaults increase this summer, other banks report that their customers' default rates are steady or have fallen in August. American Express, Bank of America, Chase and Discover Financial Services all saw fewer defaults in the past month. Capital One Financial, however, reports a greater number of clients defaulting on payments, just as Citibank has seen. They also noted an increase in late payments, which is considered a likely indicator of future defaults.
Business Week analysts believe that rising default rates such as those seen at Citibank are blips that will soon iron themselves out. Default rates are expected to generally stay low and stable.