Target card customers getting back on track

Updated: July 8, 2010 - 9:11 PM

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Target Corp. reported Thursday that fewer of its cardholders are falling behind on their payments, a positive sign for the company's profitable credit card portfolio.

The credit card operation contributed about 5 percent of pretax profits to the Minneapolis-based retailer in 2009, but it has been hit with high numbers of write-offs during the recession as consumers got into financial trouble.

In June, 4.9 percent of accounts were behind by three payments or more, down from 6.3 percent in January. About 3.6 percent of accounts are behind by four or more payments. That's down from 4.7 percent at the beginning of the year. Both rates are at their lowest in almost two years.

The company has decided to stop making detailed monthly reports about its credit card division, which reported how much it writes off each month in bad debt as well as other information about the size of its portfolio.

In the first quarter, which ended May 1, Target's portfolio was valued at $7.3 billion. The company wrote off $283 million, which amounts to 15 percent of the portfolio on an annualized basis.

Profit in credit card segment was $111 million in the first quarter, up from $39 million in the same period last year.

JACKIE CROSBY