According to Fitch’s Prime Credit Card Chargeoff Index, chargeoffs rose 26 basis points (bps) to 8.31% halting a string of five straight month-over-month improvements. For the month, some of the largest trusts that make up a majority of the index, including Chase, Citibank, and Discover, reported an increase in default rates. Credit card defaults are at a two-year low and down 26% year over year yet they remain 39% above the historical average.
On the retail (private-label) front, a similar trend is apparent, although at the typically higher baseline rate of these card portfolios.
Defaults on retail credit card ABS rose after three consecutive months of improvement, increasing 31 bps to 10.95% in March. Despite the blip, retail chargeoffs are at two year lows and are approximately 18% lower year over year.
Similar to other sources, Fitch does not see this uptick as part of a larger trend:
“The chargeoff increase is more reflective of seasonal factors like a rise in tax season bankruptcy filings and less a precursor to worsening credit trends,” said Managing Director Michael Dean. “Ongoing delinquency improvements are likely to lead to stabilizing, albeit elevated, chargeoff levels.”