NEW YORK - The six biggest credit card companies reported mixed results for customer payments in January, splitting evenly between those that had lower defaults and those with increased write-off rates.
Analysts say the long-term trends point to continued improvements as the companies keep tight reins on problem customers and remain cautious about lending.
Discover Financial Services reported a sharp drop in defaults, to 2.75 percent of balances on an annualized basis, from 3.15 percent in December. Its late payments also edged down, to 2.31 percent of balances, from 2.32 percent.
Only American Express Co. has lower rates, with its January defaults at 2.2 percent of balances and late payments at 1.4 percent.
All of the major companies saw spikes in defaults, known as charge-offs, and late payments, or delinquencies. Moody’s Investors Service estimates the six banks wrote off more than $75 billion in uncollectible balances in 2009 and 2010.
Discover’s payment metrics have improved at a faster pace than at peers like Capital One Financial Corp., which posted a default rate of 4.08 percent, and Chase, which reported a 4.25 percent charge-off rate for January.
The company said in December that its rates were at historic lows, and they have fallen since. That was predicted by a drop in late payments several months ago, said Moody’s analyst Jeff Hibbs.
The results reflect improved collection practices and more careful lending. American Express’s lowest-in-the business rates can, in part, be attributed to the same factors, but it also has a more affluent customer base, which helped mitigate its losses.
“It reflects all the work they’ve done over the last three to four years,’’ said Cynthia Ullrich, an analyst with Fitch Ratings, noting that the company has fine-tuned its collection strategy.
Bank of America Corp. had the highest rates for both measures for January. It has been trading places with Citibank for the past several months in that position.
Bank of America, Chase, and American Express reported lower rates of late payments in January, while Capital One and Citibank both posted upticks in bills past due by one month or more. But the increases were not substantial, and there is a seasonal factor that typically sends late payments higher in January as cardholders deal with holiday debt. Both analysts expect defaults to continue to fall. The pace may slow, however, if the economy sputters.