Capital One Financial Corp. on Monday said that last month it wrote off credit card debt it could not collect at the lowest rate since 2007.
The McLean, Va.-based bank's U.S. credit card charge-offs, or the balances written off after they were six months late, fell to $224 million, or 4.97 percent, of balances on an annualized basis. That was down from $248 million, or 5.87 percent, in March, and the first time since late 2007 the rate was below 5 percent.
The figure peaked at 10.87 percent in March 2010.
The rate of U.S. card payments late by 30 days or more dropped to 3.41 percent of balances on an annualized rate during the month, from 3.59 percent in March.
In March 2010, Capital One's late payment, or delinquency, rate topped out at 5.3 percent. The statistic is considered an indicator of potential default by customers.
Credit card users are showing far better payment habits than a year ago, when the industrywide charge-off rate peaked at 10.9 percent, according to Federal Reserve data. Although there has been a steady improvement for the top card issuers since that time, rates for most companies remain above the industrywide average of 3.82 percent before the recession.
One reason behind that is that those card holders who defaulted, considered among the riskiest consumers to lend to, are now unable to get cards with large credit limits. But it also reflects a steady effort to reduce the amount of debt carried on cards. Fed statistics show that total revolving debt held by U.S. consumers, which is mostly credit cards, was at $785.04 billion in March, the most recent month available. That was up slightly from February, but reflects a 19 percent drop from its peak in 2008 at $973.64 billion in August 2008, just before the economic crash.
Capital One said the charge-off rate for its international cards in April was 7.06 percent, up from 6.07 percent in March. Late payments on international cards edged down to 5.51 percent, from 5.55 percent the prior month.
In Capital One's auto loan unit, the charge-off rate fell to 0.84 percent in April, from 1.36 percent in March. The April auto loan delinquency rate dropped to 5.84 percent, from 6.11 percent the prior month.
In midday trading, Capital One shares added $1.27, or 2.4 percent, to $53.61 as the major indexes edged higher.