Pricing and risk in the credit card industry: a review of the literature

In 2008, issuers had more than $23 billion in non-securitized debt that was from 30 to 180 days delinquent. Credit card delinquency rates have fluctuated over time around 4.4% from 1991 to 2007, but since that time have risen sharply to about 6.6% in the first quarter of 2009. When consumers fall more than 180 days behind on paying their credit card bills, banks ‘charge off’ the delinquent account. Recent data suggest that in the first quarter of 2009, issuers charged off $7.5 billion, a charge-off rate of 7.6% of their outstanding credit card debt (GAO 2009).