Private-label credit card portfolios haven't looked so healthy in years, at least in terms of credit quality. That could help whet the appetite of anyone shopping for a private-label credit card portfolio, analysts say.

The average charge-off rate on U.S. retail credit cards during May fell 30 basis points, to 7.69%, according to data Fitch Ratings Inc. released Tuesday, continuing a striking decline that began last year.

The recession caused average retail credit card charge-off rates to soar to around 13% during 2010, decimating profits. Issuers reacted with dramatic changes in underwriting standards, including tightening account-approval criteria and restricting consumers' credit lines.

As issuers continue to play it relatively safe and consumers show ongoing discipline in meeting monthly payment obligations, new data suggest retail card issuers' charge-off rates will fall further this year.

The delinquency rate on retail card accounts at least 60 days past due during May declined to 2.69%, nearing Fitch's lowest-ever rate of 2.43% set in 2006.

General-purpose U.S. credit cards portfolios, which tend to have lower risk factors than private-label cards, in May also produced similar improvements in credit health, Fitch said.

The average bankcard credit card rate in May fell 35 basis points to 5.09% after a slight uptick in April due to short-term "seasonality" that briefly interrupted the general downward trend, the firm said.
The delinquency rate on general-purpose credit cards in May was 1.9%, which is "closing in on" an 18-year record low of 1.78%, Fitch said.

Those trends square with new data the American Bankers Association released July 2.

The average delinquency rate on credit card accounts at least 30 days past due declined 7 basis points during the first quarter, to 3.08%, the lowest level the association has measured since 2001 (see story).

"This is another strong quarter of improving delinquencies," James Chessen, the association's chief economist, said in a release, alluding to similar performance in nearly every category of lending. "Consumers have done a remarkable job getting their finances under control."

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