Delinquencies and Charge-Offs
of Bank Credit Cards

The Federal Reserve Board publishes two quarterly releases covering, among other items, seasonally adjusted delinquencies and charge-offs of bank credit cards. Delinquent accounts are defined as those that are past due thirty days or more and accruing interest and those in non-contractual status. The percentage of end-of-period delinquent loans is calculated by dividing the dollar amount of such loans by the total of end-of-period loans. Charge-offs are the dollar amount of loans removed from the books and charged against loss reserves, and are measured net of recoveries. As in the case of delinquent loans, the percentage of loans charged off is calculated by dividing the dollar amount of loans charged off by total end-of-period loans. Quarterly data for both series are available beginning with the first quarter of 1991.

One of the most striking messages from the table is that percentage of charge-offs this year is at its highest level since the Federal Reserve has gathered the data. A second interesting finding is that from the first quarter of 1991 through the third quarter of 1995, delinquency rates exceeded charge-off rates. A likely explanation for this finding is that a significant portion of the charged off delinquent accounts were relatively small. In sharp contrast, from fourth quarter of 1995 through the second quarter of 2002, the charge-off rate on bank credit cards exceeded the delinquency rate in every quarter.

Source: Federal Reserve Board.