Capital One Charge-Offs Leap to 9.6% in November

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Capital One's charge off rate jumped from 9.04% in October to 9.60% in November, indicating the increased number of accounts that Capital One (COF) does not believe it will collect. This comes as little surprise. Moody's has previously predicted that charge-offs for credit card companies will peak between 11% and 13% by mid-2010. When Capital One next reports earnings, expect to see a higher charge-off rate and a decrease in profits.

Moody's noted that the early-stage delinquency rate, which measures account balances for which a payment is 30 days late as a percentage of the total outstanding principal balance, is running 14% higher than for the same period last year. Moody's expects this increase to translate into even higher charge-off levels in the first half of 2010.