American Express charge-offs continue to decline

DES MOINES, Iowa

American Express Co. said Monday that the rate at which it wrote off uncollectable card balances in July fell to its lowest level since the economic crisis began. Fewer of its customers paid their monthly bills late as well.

The New York-based company, which caters to a more affluent customer base than other credit card issuers, said in a regulatory filing that its net write-off rate dipped to 5.5 percent in July, from 5.7 percent in June.

Card companies typically write off loans after they're 180 days past due, the point at which it's assumed the balances won't be collected.

In the past year, banks have written off a record amount of loans as customers struggled to pay. By the first three months of this year, the overall charge-off rate was just short of 10 percent of balances. That's still well above the 3.8 percent rate seen in the second quarter of 2007, before the recession began, but banks have seen steady improvement in recent months. That's likely a function of credit card issuers having pared customers from their rolls, as well as remaining customers being able to better manage their debt.

American Express charge-offs peaked in April 2009 at 10.1 percent.

Reflecting a trend across the industry, Amex also said its rate of late payments fell to 2.6 percent in July from 2.7 percent in June. Delinquencies topped out in March 2009 at 5.1 percent.

American Express shares fell 22 cents to $41.51 in afternoon trading.