Capital One posts lower charge-off rate for June; late payments drop to lowest point of 2010

Capital One credit card charge-offs fall in June

NEW YORK — Capital One Financial Corp. wrote off a lower rate of uncollectable balances in June, and late payments fell to their lowest point in the year, two signs that credit card users are getting better control of payments.

Capital One said in a regulatory filing Thursday its net U.S. card charge-offs fell to $422.5 million, or 9.3 percent of total balances, in June, from $436.2 million, or 9.5 percent in May.

Card companies typically write off loans after they’re 180 days past due, the point at which it’s assumed 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. By the first three months of this year, the charge-off rate was just short of 10 percent of balances, according to the Federal Reserve. That compares with a rate of 3.8 percent in the second quarter of 2007, before the recession began.

Card users appear to have gotten a handle on payments. Capital One said its rate of loans 30 days or more past due was basically flat at 4.79 percent in June, from 4.8 percent in May, the lowest rate for the year.

The charge-off rate for international cards in June was 8.3 percent, up marginally from 8.2 percent in May. The international delinquency rate eased to 6.03 percent in June, from 6.08 percent in May.

In Capital One’s auto loan unit, the charge-off rate jumped to 2.72 percent in June, from 1.87 percent in May. The auto loan delinquency rate was down a fraction to 7.74 percent in June, from 7.75 percent the month earlier.

In morning trading, Capital One shares dropped $1.66, or 3.7 percent, to $42.87 as the broader market declined.