Bank of America posts fractionally lower charge-off level in May; delinquencies decline too

Bank of America charge-offs edge down in May

NEW YORK — Bank of America said Tuesday that its credit card charge-off rate dropped marginally in May, a narrower decrease than reported by most of its peers.

Charlotte, N.C.-based Bank of America Corp. said its net charge-offs fell to 12.70 percent in May, down a fraction from 12.71 percent in April, according to a filing with the Securities and Exchange Commission.

The decrease for one of the nation’s largest card issuers was smaller than the declines reported by competitors, although none reported substantial improvements. Card companies wait until loans are 180 days past due before they assume the balances won’t be collected.

In the past year, the credit card industry has written off a record amount of loans as customers struggled to pay off debt. The charge-off rate rose to 10 percent in the first three months of this year, according to the Federal Reserve, from 9.5 percent in the fourth quarter of 2009. That compares with a rate of 3.8 percent in the second quarter of 2007, before the recession began.

Continued high unemployment is among the factors weighing on borrowers’ ability to pay off their debts.

Like other card issuers, Bank of America reported a bigger improvement in delinquency rates, which may be an indication that people are getting a handle on paying their bills on time.

Bank of America said payments late 30 days or more slipped to 6.39 percent in May, from 6.73 percent in April. That’s a sign that fewer of its credit card customers will default in coming months.

As the broader market rallied Tuesday, Bank of America shares gained 39 cents, or 2.5 percent, to close at $15.80.