Discover charge-offs at lowest level of year

NEW YORK -- Write-offs of uncollected Discover Card balances and late payments both fell in October to their lowest levels of the year.

In a regulatory filing Monday, the Riverwoods-based credit card company said it wrote off $115.5 million, or 6.83 percent of balances, in October, down from $121 million, or 7.15 percent, in September.

Card companies typically write off loans after they're 180 days past due. Discover's charge-off rate peaked in February at 9.11 percent.

Discover said its rate of payments that were 30 days or more past due fell to 4.34 percent in October from 4.41 percent in September, the ninth straight month of decline. The late payment rate topped out 5.55 percent in January.

The improvements at Discover reflect continued movement toward lower overall credit card debt nationwide. Federal Reserve statistics show that total revolving balances for consumer credit, which is mainly credit cards, dropped in September to their lowest point since May 2005.

That drop stems from a combination of factors, including consumers intentionally reducing their balances, credit card companies cutting customers' available credit lines and the record amounts written off by banks in the past three years. Industrywide, the charge-off rate peaked in the second quarter of this year at 10.66 percent of balances. In the two years prior to the recession, it averaged 3.82 percent, Fed data show.

In midday trading, Discover shares gained 45 cents, or 2.4 percent, to $19.05 after matching a 52-week high of $19.16 earlier in the session.