American Express puts card write-offs at 10%

San Francisco: American Express Co, the largest US credit card company by purchases, said uncollectible loans topped 10 per cent in April while Capital One Financial Corp reported a decline in the rate, helped by a change in the way bankruptcies are recorded.

American Express said the net write-off rate for managed loans in the US was 10.1 per cent, compared with 8.8 per cent in March, according to a filing by the New York-based company yesterday.

Capital One, the McLean, Virginia-based bank and credit- card firm, reported bad card loans fell to 8.6 per cent from 9.3 per cent after it began charging off bankruptcies within its 30-day guideline instead of its previous practice of two to three days.

Credit-card lenders boosted fees and interest rates as US unemployment headed toward 8.9 per cent as of April, the highest in a quarter century. Defaults historically rise and fall with the jobless rate, and Capital One said "an increase in the volume of bankruptcies" had partly been responsible for the way it now charged off unpaid balances. Without the change, the rate would have been closer to 9.16 per cent.

American Express, which has been selling loans that have been written off, said its delinquency rate for overdue loans narrowed to 1.8 per cent in April from 1.9 per cent in March. Capital One's rate fell to 5.04 per cent from 5.08 per cent in March. The data for both companies include US loans that lenders retain on their books and those that have been securitised.