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Discover posts small uptick in Sept. late payments

01.12.11

Discover Financial Services on Monday reported a slight rise in the rate of late payments by its credit card customers even as defaults continued to decline.

The card issuer said in a regulatory filing its delinquency rate -- the rate that customers were late by 30 days or more with payments -- was 2.5 percent of balances on an annualized basis in September. That was up from 2.49 percent in August.

It marked the first increase in the delinquency rate the Riverwoods, Ill.-based card issuer has reported since January 2010. Nevertheless, even with the fractional increase, the rate remains near its lowest point since before the recession started.

Discover delinquencies reached their highest point in October 2009, when they hit 5.72 percent. They wavered for a few months and then began a 19-month decline.

The figure is important because it is considered an indicator for what to expect for defaults in coming months.

For September, defaults continued to drop, as they have each month since February. Discover wrote off $45.8 million, or 3.17 percent of balances on an annualized basis, in September, down from 3.6 percent in August.

Source: BusinessWeek