Capital One Reports Higher Charge Offs for Credit Cards in June

Capital One (NYSE: COF) reported this week that charge offs in June grew at an annual rate 6.42 percent to almost $364 million for their U.S. card operations  — the highest rate in their records back to 2005 — and the 30 days + delinquency rate was 3.85 percent for the month.

That compares to 6.28 percent and 3.81 percent, respectively, in May, and 5.98 percent and 4.36 percent in January.

The charge offs and delinquency data was reported Monday in Capital One’s Monthly Charge-off and Delinquency Statistics filing with the SEC.

The financial services company had even a tougher time with delinquencies in the auto finance market, with delinquencies reaching 7.62 percent in June, compared to 7.27 percent in May and 7.42 percent in January. After the previous high-water mark in January, delinquencies had dipped to 6.05 percent in February.

Capital One will release its financial report for the second quarter on Thursday.

“What you’re seeing with Capital One is that the economy is still hammering away at consumers’ ability to pay off debt,” said Dimitri Michaud, Kaulkin Ginsberg consumer finance analyst. “The big difference now is there is a slowdown in the rate at which [charge-offs] are rising.”

Charge-offs rose at a much faster clip last year. Michaud credits the slowing rate of increase on larger collection staffs, better emphasis on portfolio risk and a slow down by Capital One in attempts to grow its business. Other credit card companies have also slowed their attempts to grow their business.

Michaud adds that Capital One and other lenders are also becoming more aggressive in attempting to collect from borrowers after 30 days, rather than waiting until the accounts become 90 days past due.