In what could be a warning sign for markets and the broader economy, credit-card losses are mounting, a reversal of a six-year-long trend. The average net charge-off rate for large U.S. card issuers—the percentage of outstanding debt that issuers write off as a loss—increased to 3.29 percent in the second quarter, its highest level in four years, according to Fitch Ratings. The quarter was also the fifth consecutive period of year-over-year increases.
All eight large issuers, including J.P. Morgan Chase, Citigroup, Capital One and Discover Financial Services, had increases for the quarter. Card balances nationwide rose 6 percent over the last 12 months through May, a growth rate that is up from about 1 percent four years ago, according to the Federal Reserve.
While losses are rising, they remain low compared with historical levels. As the recession came to an end, the net charge-off rate reached 10 percent in early 2010.
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