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Globe and Mail
a day ago
- Business
- Globe and Mail
Citigroup's Card Delinquencies Rise: Will it Impact Asset Quality?
In a recent SEC filing, Citigroup Inc. 's C subsidiary, Citibank N.A., disclosed a rise in its credit card trust delinquency rates for July 2025 from June 2025. Nonetheless, both metrics remained under their pre-pandemic levels despite the recent uptick. For the period ending July 2025, the Citibank Credit Card Issuance Trust posted a delinquency rate of 1.42%, up modestly from 1.38% in June. Encouragingly, the figure remains below the 1.53% level seen in July 2019, before COVID-19 disruptions. Meanwhile, the trust's net charge-off rate eased to 2.07% in July from 2.12% in June, considerably lower than the 2.91% recorded in July 2019. Lending activity within Citibank's credit card trust showed some softness. Principal receivables in the trust decreased to $20.7 billion by the end of the period (July 2025) from $20.9 billion the previous month. The company's net credit loss (NCL) witnessed a compounded annual growth rate (CAGR) of 4.3% over the past four years ended in 2024. In the first half of 2025, NCL rose 2% year over year. Also, the company's provisions saw a CAGR of 38.9% from 2022 to 2024, with the rising trend persisting in the first half of 2025. Looking ahead, Citigroup's profitability may face headwinds from the continued rise in credit losses in its Branded Cards portfolio, wherein NCL rates are projected between 3.50% and 4% in 2025. At the end of 2024, branded cards NCL rates were 3.55%. Should economic conditions weaken further, losses may accelerate, prompting higher loan-loss provisions and pressuring earnings. With interest rates expected to stay elevated for longer, borrowers' repayment capacity will remain under strain. Coupled with the lingering effects of quantitative tightening, these dynamics suggest that Citigroup's asset quality is likely to remain under pressure in the near term. How Citigroup Stacks Up Against Peers in Card Delinquency U.S. credit card metrics were mixed in July, with delinquencies rising and net charge-offs falling. Following the industrywide trend, Capital One Financial COF and JPMorgan JPM credit card delinquency rates also increased, while net charge-off fell. Capital One's delinquency rate rose to 3.67% in July 2025 from 3.60% in June, while Capital One's net charge-off rate of 4.83% declined from 4.96% in the prior month. JPMorgan Issuance Trust delinquency rate ticked up to 0.86% in July from 0.84% in June. JPMorgan's net charge-off rate of 1.54% dropped from 1.69% in June and 2.21% six years ago. C's Price Performance, Valuation & Estimates Shares of Citigroup have gained 36.6% year to date compared with the industry 's growth of 23.2%. Image Source: Zacks Investment Research From a valuation standpoint, C trades at a forward price-to-earnings (P/E) ratio of 10.57X, below the industry's average of 14.47X. Price-to-Earnings F12M Image Source: Zacks Investment Research The Zacks Consensus Estimate for C's 2025 and 2026 earnings implies year-over-year rallies of 27.4% and 27.7%, respectively. The estimates for 2025 and 2026 have been revised upward over the past 60 days. Estimates Revision Trend Image Source: Zacks Investment Research Citigroup currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. See our %%CTA_TEXT%% report – free today! 7 Best Stocks for the Next 30 Days Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report Capital One Financial Corporation (COF): Free Stock Analysis Report
Yahoo
03-07-2025
- Business
- Yahoo
What is a credit card charge-off?
A charge-off is a debt that has gone unpaid for a sufficient amount of time and is deemed uncollectible by the creditor. Charge-offs do not erase your debt, and you are still responsible for paying it. It may be handed over to a debt collector and can stay on your credit report for up to seven years. It is best to avoid charge-offs, and if you are struggling to make payments, reaching out to your creditor for a hardship program may be a helpful solution. The language used in credit reporting can often be confusing to consumers. The term 'charge-off' can be one of those somewhat baffling terms. In this guide, we'll discuss what credit card charge-offs are and what they mean for your credit reports and scores. A charge-off is a debt that has gone continuously unpaid for a sufficient amount of time — usually around 120 to 180 days after your account has become delinquent — and that the creditor has given up on trying to collect. Up to this point, the account has counted as an asset on the creditor's balance sheet. When it is deemed uncollectable, it can no longer be counted as an asset and is 'charged-off.' While that may sound like the creditor has tossed out your debt, that's not the case. The write-off is purely an accounting function that applies only to the company's balance sheet, not your debt. You still owe the bill, and they still expect you to pay it. In a word, badly. Charge-offs, by their nature, mean that you haven't paid your bills. Payment history is the most influential factor in FICO scoring and accounts for 35 percent of your total score. Charge-offs usually happen after about six months of non-payment. So, for every month the account gets further behind, your score takes another hit. By the time a charge-off happens, your credit score will have significant damage — even if you had a good score to begin with. Yes. Once an account is charged-off, your debt will likely be handed over to a debt collector. If that happens, your credit report will reflect a zero balance on the charge-off, probably with a note saying 'sold to' or 'transferred to' and the name of the collection agency. You'll also have a new line called 'collections' that shows the balance due, a note on the account saying 'transferred from' or 'sold to' and the name of the collection agency. Keep in mind: A charged-off balance does not relieve you of your responsibility to pay. It may change who you have to pay, but it does not erase your debt or the fees. Plus, interest may continue to accrue. As long as there is an amount listed under the charge-off, you can contact the original creditor to make payment arrangements. But once it moves to collections, you will likely have to work with the collector. Also, you should know that once a charge-off happens, the debt will often remain on your credit report for up to seven years after the date of the original or first delinquency, whether you pay it off or not. The same is true of collections, which are treated as an extension of your loan from the original creditor and will usually be deleted at the same time in seven years. No matter what, though, you will still owe the money. Apart from the fact that you're legally responsible for your debt, there are also potential practical benefits to paying off a charged-off debt. While paying a charge-off won't erase it from your credit report, it will change the charge-off status to 'paid.' This is still a derogatory mark, but some future lenders may look more favorably at a charge-off paid notation. If your debt has been charged-off and sold to a collections agency, they may contact you through collections calls and letters or take legal action against you. Paying off the debt can stop debt collectors from taking further action. You should also keep in mind the statute of limitations on debt in your state, as well as your rights when dealing with debt collectors under the Fair Debt Collection Practices Act. You will probably still be able to get a credit card after a charge-off, but you may receive a higher interest rate, and your options may be limited depending on how low your score is. There is no law requiring creditors to offer you credit. Each lender will look at your situation from their own point of view and risk tolerance. What they decide to offer you — if anything at all — is totally up to them. If all else fails, you can apply for a secured credit card to get you back in the credit card game. These cards look and function the same as any other credit card, but they're easier to get because you give a cash deposit as collateral upfront. If you must go this route, be sure to choose a secured card that reports to the credit bureaus so that the work you do to improve your credit standing is noted. As with all things credit reporting and score-related, getting positive data onto your file after you have done some damage is the best way to rebuild your credit. This starts with paying all your bills on time, every time. Here are some additional ways to begin building your credit score: The best way, of course, to undo any damage to your credit score is to figure out a way to repay any charge-offs you have. Again, even if it still counts against you for a while, future lenders will see that you have been working to make it right. Work to reduce your credit utilization to below 30 percent. The lower the usage amount, the better for your score. Don't close old credit card accounts unless you must. Length of credit history accounts for 15 percent of your FICO score. Create a budget and stick to it. If you are able, consider taking on secondary income, such as a side hustle, small business or additional work to support the funds going toward paying off any debt. Learn more: Credit expert Ted Rossman explains how to raise your credit score without going into debt. If at all possible, you should avoid charge-offs and the resulting collections. If you need help paying your credit card bill, don't wait to reach out to your creditor and ask about a hardship program. Although that is generally a short-term solution, it could be the answer that will keep you from facing a charge-off in the future. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CBS News
26-06-2025
- Business
- CBS News
5 ways to deal with your charged-off credit card accounts now
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. You aren't really free of what's owed if your credit card debt has been charged today's economy, relying on credit cards isn't just common. For many people, it's a necessity. From covering rising grocery bills to managing emergency expenses, more people are leaning on this type of short-term borrowing just to stay afloat. But if you're using credit cards to fill in the gaps and those balances spiral out of control, causing you to miss payments, the consequences can be serious. If you fall too far behind, you might even get hit with a charge-off notice, which is a sign that your credit card issuer has written off the debt as a loss. But here's the reality of the situation: While a charge-off means the lender is considering your debt a loss, it doesn't wipe your slate clean. It simply means the original creditor no longer expects to collect the money you owe. You're still legally on the hook for the balance (along with the interest and fees), and the charged-off account can damage your credit score for years on end. It may even end up in the hands of a debt collector, triggering constant calls, letters or a lawsuit. Fortunately, you're not out of options if this happens. Whether you want to resolve the issue quickly or are looking for longer-term relief, there are several ways to deal with your charged-off credit card accounts now. Find out how to get extra help with your high-rate credit card debt. 5 ways to deal with your charged-off credit card accounts now With a charge-off, the debt is still legally owed by you, so you'll want to deal with the issue as soon as possible. Here are a few ways you can do that now: Option 1: Pay the full balance immediately If you have the cash available, paying off the entire charged-off balance is often the cleanest solution to dealing with this type of debt. This approach stops any further collection efforts, prevents additional fees and interest and shows future lenders that you ultimately made good on your debt. While the charge-off will still appear on your credit report for seven years, having a zero balance looks significantly better than an outstanding debt. The downside? You'll pay the full amount when you might have been able to negotiate for less. Learn more about the debt relief options available to you now. Option 2: Negotiate a lump-sum settlement Many people don't realize that creditors will often accept significantly less than what's owed on charged-off accounts. Depending on how old the debt is and the creditor's policies, you might settle for anywhere from 30% to 50% less than the original balance (on average). So, this option can save you substantial money while still resolving the debt. The key to successful settlement negotiations is having cash ready and being persistent. Start by offering 25% to 30% percent of the balance and work your way up. And, be sure to get any settlement agreement in writing before sending your payment. Option 3: Set up a payment plan If you can't afford a lump sum but have reliable income, your creditors may work with you on a payment plan. This approach allows you to chip away at the debt over time while demonstrating good faith effort to repay what you owe. Payment plans typically involve monthly payments over 12 to 36 months, and some creditors may even reduce the total amount owed if you stick to the plan. Before agreeing to any payment plan, though, make sure you can realistically afford the monthly payments. Missing payments on a settlement plan can restart collection efforts and potentially lead to legal action. And, be sure to clarify whether interest will continue accruing during the payment period, too. Option 4: Dispute the debt if it's inaccurate Sometimes the best approach is to challenge the debt altogether. If you believe the charged-off account contains errors, whether it's the wrong amount, not your debt, has already been paid or is past the statute of limitations, you can dispute it with the credit bureaus. With this route, you'll send a debt validation letter within 30 days of first contact from a debt collector, requesting proof that you owe the debt and that they have the right to collect it. If they can't provide adequate verification, you can dispute the account with credit bureaus. Option 5: Let it age out naturally Charged-off accounts automatically fall off your credit report after seven years from the date of the first delinquency. So, in some cases, the best strategy might be to do nothing and let the account age off your credit report. But while this option doesn't cost money upfront, it does mean living with damaged credit for the full seven-year period. Creditors can still attempt to collect the money owed during this time, and in some states, they might even sue you if the debt is large enough. The bottom line Charged-off credit card accounts can be tough to deal with, but they're not the end of your financial story. Whether you're ready to pay it off, negotiate a settlement or dispute the debt entirely, there are multiple ways to tackle the problem. However, you'll need to choose the approach that fits your financial reality and take action before things get worse. Ignoring a charged-off account won't make it disappear, but the right strategy can make it far less painful.
