Credit Card Default and Delinquency Rates Send Mixed Signals

Conflicting metrics have some credit card industry analysts scratching their heads as lenders anticipate an unusual holiday season. On one hand, most major credit card issuers have reported drops in the number of account defaults during the month of October. However, an increase in the number of delinquent accounts could either mean that cardholders are hoarding cash in advance of holiday spending, or that banks may have to brace themselves for another wave of write-offs.

Capital One, American Express, Chase Credit Cards, Bank of America, and Citibank all reported better than expected declines in the amount of charge-offs during October. Company officials told shareholders and reporters that many of their customers used tax refunds, company bonuses, and other lump sum payments to pull their accounts back from the brink of cancellation. Only American Express reported a similar drop in the number of accounts in delinquent status, signaling that many American credit card users still struggle with making monthly minimum payments.