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Net Charge-offs
Our net charge-offs include the principal amount of losses charged off less principal recoveries and exclude
charged-off and recovered interest and fees and fraud losses. Charged-off and recovered interest and fees are
recorded in interest income and loan fee income, respectively, which is effectively a reclassification of the provision for
loan losses, while fraud losses are recorded in other expense. Credit card loan receivables are charged off at the end
of the month during which an account becomes 180 days contractually past due. Personal loans and private student
loans, which are closed-end consumer loan receivables, are generally charged off at the end of the month during which
an account becomes 120 days contractually past due. Generally, customer bankruptcies and probate accounts are
charged off at the end of the month 60 days following the receipt of notification of the bankruptcy or death but not later
than the 180-day or 120-day contractual time frame.
The following table presents amounts and rates of net charge-offs of key loan products (dollars in millions):
For the Calendar Years Ended December 31, For the Fiscal Years Ended November 30, For the One
Month Ended
December 31,
2012
2015 2014 2013 2012 2011
$ % $ % $ % $ % $ % $ %
Credit card loans.......... $ 1,220 2.22% $ 1,191 2.27% $ 1,100 2.21% $1,240 2.62% $2,036 4.47% $ 106 2.47%
Personal loans.............. $ 112 2.15% $ 94 2.04% $ 79 2.13% $ 69 2.33% $ 67 3.02% $ 7 2.52%
Private student loans
(excluding PCI(1))......... $ 56 1.07% $ 57 1.29% $ 46 1.30% $ 19 0.73% $ 7 0.48% $ 2 0.81%
(1) Charge-offs for PCI loans did not result in a charge to earnings during any of the years presented and are therefore excluded from the calculation. See Note 5: Loan
Receivables to our consolidated financial statements for more information regarding the accounting for charge-offs on PCI loans.
The net charge-off rate on our credit card loans decreased by 5 basis points for the year ended December 31,
2015 as compared to the year ended December 31, 2014 as a result of lower bankruptcy filings partially offset by
lower recoveries. The net charge-off rate on our personal loans grew by 11 basis points for the year ended December
31, 2015 as compared to the same period in 2014 driven by higher charge-offs as a result of continued loan growth
and seasoning of the portfolio. The net charge-off rate on our private student loans excluding PCI loans decreased by
22 basis points for the year ended December 31, 2015 as compared to the same period in 2014 resulting from
continued favorable economic conditions.
The net charge-off rate on our credit card loans increased 6 basis points for the year ended December 31, 2014
as compared to the year ended December 31, 2013 during a period of historical lows. The net charge-off rate on our
personal loans declined by 9 basis points for the same period due to growth in the personal loan portfolio as, in
general, loans do not begin to show signs of credit deterioration or default for some period of time after origination.
The net charge-off rate on our private student loans excluding PCI loans was relatively flat for the year ended December
31, 2014 as compared to year ended December 31, 2013.