DEFINITION of 'Roll Rate'

The percentage of credit card users who become increasingly delinquent on their accounts. Roll rate refers to the percentage of card users who "roll" from the 30-days late to the 60-days late category, or from the 60-days late to 90-days late category, and so on. In the credit card industry, creditors report late payments in one of six categories: 30-days late, 60-days late, 90-days late, 120-days late, 150-days and charge-off (which occurs when a payment is 180 days late). Banks use roll rates to predict credit losses based on delinquency.


For example, if 20 out of 100 credit card users who were delinquent after 30 days are still delinquent after 60 days, the 30-to-60 (days) roll-rate is 20%. Furthermore, if 30 out of 100 credit card users who were delinquent after 60 days are still delinquent at the 90-day mark, the 60-to-90 roll-rate is 30%, and so on.

Credit card issuing banks estimate credit losses by segregating their overall credit card portfolio into delinquency "buckets," similar to the 30-day, 60-day categories mentioned earlier. A bank's management measures roll rates for the current month and current quarter, or an average of several months or quarters to smooth out fluctuations. Once the roll rates are determined, they are applied to the outstanding receivables within each bucket, and the end results are aggregated to estimate the required allowance level for credit losses.

Banks calculate roll rates based on the total balance in each delinquent category. For instance, if the 30-day delinquent balance for a small bank's credit card portfolio in February is $100 million, and the 60-day delinquent balance for March is $40 million, the 30-to-60 day roll-rate in March is calculated 40% (i.e. $40 million/ $100 million). This implies that 40% of the $100 million receivables in the 30-day bucket in February have migrated to the 60-day bucket in March.

  1. Delinquent Account

    A credit card balance on which a consumer has failed to make ...
  2. Delinquency Rate

    The percentage of loans within a loan portfolio that have delinquent ...
  3. Never Pay Strategy

    A colloquial term used to describe an individual who opens a ...
  4. Mortgage Bankers Association's ...

    A voluntary survey of over 120 mortgage lenders, including mortgage ...
  5. Credit Card Balance

    The amount of charges, or lack thereof, owed to the credit card ...
  6. Secured Credit Card

    A type of credit card that is backed by a savings account used ...
Related Articles
  1. Personal Finance

    How Credit Card Delinquency Works

    The more you understand about delinquency, the better prepared you'll be to handle it.
  2. Investing

    Value of Subprime Credit Card Debt in Debate

    Many banks are easing out of subprime credit card debt while other financial institutions see opportunity.
  3. Investing

    Investing In Credit Card Companies

    This investment requires keeping an eye on consumer indexes and the overall health of the economy.
  4. Personal Finance

    How Credit Cards Affect Your Credit Rating

    The average American household has four cards, but does that mean more is better?
  5. Personal Finance

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
  6. Small Business

    How to Use Small Business Credit Cards

    A business credit card can be a convenient way to increase your company's purchasing power, but must be carefully managed.
  7. Personal Finance

    Don't Get Trapped by Subprime Credit Cards

    Beware of subprime credit cards. It may be easy credit access, but can take advantage of your poor credit score and eventually catch you in a debt spiral.
  8. Personal Finance

    Terrible Credit Score? Try These Credit Cards

    When your credit is less than stellar you have fewer choices. But some are still better than others. Here's our read on which cards to get.
  9. Personal Finance

    Understanding Credit Cards

    Credit cards are a type of unsecured personal loan between the credit card issuer and the credit card holder.
  10. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are 5 times you shouldn't pay with a credit card – and 5 times you should.
Trading Center