What does Charge-off rate mean?

The charge off rate is a formula used in the industry, it is the number of charge offs which is divided by the average outstanding credit card balances owed to the specific credit card issuer. The term charge off comes from accounting and it means that a company has concluded it has no possibility of collecting a debt and that this has to be charged off its books.

If the charge off rate is on the rise, it usually means that the economy is under stress.