Capital One Reports Rising Credit Card Losses
Capital One disclosed this morning that losses in its credit card portfolio rose sharply in March, fresh evidence that borrowers are struggling to repay all kinds of bank loans, The Post's Binyamin Appelbaum reports.
The company said that the annualized rate of net charge-offs -- basically, the share of loans it believes is impossible to collect -- rose to 9.33 percent in March, from 8.06 percent in February.
Some economists believe that credit card defaults represent the next wave of financial distress, similar in nature and possible size to the collapse of the housing bubble. Credit card debt rose as the housing bubble did.
Losses on credit card loans historically track the unemployment rate, but during the current recession, losses at Capital One and other issuers have outpaced unemployment.
Capital One, based in McLean, continues to report slightly better results than rivals including Citigroup and American Express.
The company's shares were down about 5 percent to $16.25 in early trading.
In its TV commercials, Capital One asks: "What's in your wallet?" For too many Capital One credit card holders, the answer evidently is: "Nothing."
April 15, 2009; 10:32 AM ET
Categories: The Ticker | Tags: Capital One, credit cards
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