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Citibank reported new multi-year low points for late payments and defaults on its credit cards on Wednesday.
The credit card division of Citigroup Inc. said in a regulatory filing that its rate of payments late by 35 days or more dropped in May to 3.66 percent of balances on an annualized basis. That's down from 3.87 in April, and marked the 10th-straight month of decline in the bank's delinquency rate, which is now back at the rates seen before the recession.
Delinquency is considered an important predictor of future default.
Citi also reported a default, or charge-off, rate of 7.81 percent annualized for May, down from 7.85 percent in April.
That rate is significantly below Citi's peak default rate of 12.14 percent in August 2009, although it remains second-highest among the nation's top six credit card issuers, behind Bank of America Corp. Card issuers typically write off balances that are 180 days past due, the point at which they are deemed likely too far behind for customers to be able to pay back.
Industrywide, charge-off rates have dropped off sharply, down to 6.96 percent in the first quarter of this year, compared with a peak of 10.97 in the second quarter of 2010, according to Federal Reserve data.
Card companies typically write off loans after they are 180 days past due, the point at which they assume they won't be able to collect the balances.
One reason for the improvement is that banks have already written off the balances of most customers expected to default, and those individuals have a hard time getting new credit. The industrywide delinquency rate in the first quarter hit 3.89 percent, compared with 6.61 percent at its height two years earlier.
Credit card users have also been working to pay down their balances as economic uncertainty continues. In April, outstanding balances on revolving loans, which are mostly credit cards, dropped to $790.11 billion, down 5 percent from $831.11 billion a year earlier, Fed data show. In August 2008, there were more than $973.64 billion in outstanding revolving loan balances.
Shares of Citigroup shares slid 78 cents, or 2 percent, to $38 in Wednesday trading as the broader markets fell.