One analyst who looked at the credit card delinquency rates for February noted that the figures appeared to be improving, but that they might be seasonal. It is another way of saying that they might not be improving at all.
American Express tends to have more affluent customers than most other credit card firms, and its delinquency rates did not improve from January to February.
Citigroup (C) reported that both its delinquencies and charge offs for credit cards balances got worse in February.
Based on the data, some economists believe that the huge hole that credit card write-offs made in bank balance sheets has “peaked.” Most of the banks that reported their February figures stated that they believed that the second quarter of the year will be no worse than the first, and, sometimes they said numbers might be a bit better.
But, forecasting credit card write-offs is like forecasting the state of the housing market or unemployment. It is not an exact science even on its best day. Credit card delinquencies are still bad and no one can reasonably say they are getting better until there have been several months when the numbers improve significantly. The rest is wishful thinking.
Douglas A. McIntyre
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