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Capital One Reports Increased Charge-offs

I just read an interesting article about Capital One on Forbes.com. The credit card issuer had a rough day on Wall Street on Wednesday (10-15-08). They reported that their charge-offs, otherwise known as people that don’t pay their bills jumped to 6.34% in September. That’s up from 5.96% in August. That news contributed to a sharp sell-off of capital One stock. It was down $5.10 per share, or 11.5% to $39.37.

This certainly should come as a surprise to no one. Delinquencies in payment and the amount of troubled accounts always rise in tough economic times and I think we are in for a whopper this time around. It looks as if a recession is inevitable at this point. The only question is how long it will last and whet the severity of it will be.

What this all means for the average cardholder is that it will all the more difficult to pay off the balances they carry. Options that include transferring a balance to a 0% APR intro offer will become less available as the credit card companies tighten up their application approval process. Discover Card shares shed 8.4% of their value on Wednesday and American Express lost 11.9% to settle at $24.84 a share.

There is no question that these charge-offs will not be isolated to Capital One. You can bet that banks that issue credit cards and credit card companies themselves will see increases in defaults and delinquencies. The only remaining question will be how bad the damage is.

Related Information:

  1. Capital One Reports 4th Quarter Loss Capital One, like their competitors in the credit card industry, continued to struggle with their earnings….
  2. Capital One Financial Corp Reports A Record 4th Quarter Loss Capital One Financial Corp. is the parent company of credit card behemoth Capital One. It also has recently gotten into the branch banking business by buying Louisiana based Hibernia and…
  3. Bad News For Capital One Capital One, like their competitors, are seeing a rather large increase in credit card delinquencies….
  4. Credit Card Charge-Offs Will Exceed $100 Billion Credit card charge offs exceed $100 billion….