Capital One said the annualized net charge-off rate for U.S. credit cards, debts the company believes it will never collect, rose to 9.41 percent in May from 8.56 percent in April.
This trend is followed by every other major credit card issuers in US, which are reporting high and rising default rate.
This is lead by Bank of America reporting high charge-off rate of 12.50% in May, follow by American Express 10.4% charge-off in the same period.
Meanwhile, Citigroup the largest issuer of MasterCard branded credit cards reported charge-off rate of 10.50% in May. For record, Discover charge-off rate increased to 8.91% in the same period.
The spike in credit cards default in US is inline with the recent announced U.S. jobless rate in May, which rose to a 26-year record high of 9.4%.
The delinquency rates, an indicator of future credit losses, fell across the industry though. However, the delinquency rates is expected to rise in coming months. Analysts believe the decline was due to a seasonal trend, as consumers used tax refunds to pay their debts.