charge-off: meaning, definition, pronunciation and examples
C1Formal, Business/Finance
Quick answer
What does “charge-off” mean?
A debt that a creditor writes off as uncollectible.
Audio
Pronunciation
Definition
Meaning and Definition
A debt that a creditor writes off as uncollectible.
The accounting action of removing a bad debt from financial records; figuratively, to dismiss or write off something as a loss or failure.
Dialectal Variation
British vs American Usage
Differences
The term is used in both varieties but is more prevalent in American financial and credit reporting contexts. British English may use 'write-off' more frequently for the same concept.
Connotations
In both, it carries a negative financial/credit implication. In American usage, it's a specific term in banking regulation and credit scoring.
Frequency
Higher frequency in American English, particularly in consumer finance, banking, and credit reporting industries.
Grammar
How to Use “charge-off” in a Sentence
The bank decided to charge off the debt.The charge-off of the loan affected his credit score.Vocabulary
Collocations
Examples
Examples of “charge-off” in a Sentence
verb
British English
- The lender may charge off the debt after 180 days of non-payment.
American English
- The bank charged off the defaulted auto loan last quarter.
adjective
British English
- The charge-off amount was significant.
- He reviewed his charge-off accounts.
American English
- The charge-off rate is a key metric for investors.
- She disputed the charge-off entry on her report.
Usage
Meaning in Context
Business
The quarterly report showed an increase in the net charge-off rate for consumer loans.
Academic
The study analysed the correlation between unemployment rates and bank charge-off ratios.
Everyday
I'm worried this late payment will lead to a charge-off on my credit report.
Technical
Under GAAP, a charge-off is recognized when a receivable is deemed uncollectible.
Watch out
Common Mistakes When Using “charge-off”
- Using 'charge-off' to mean a discount or reduction in price.
- Confusing it with 'charge' as in an attack or fee.
- Using it as a general synonym for 'cancel' outside of financial contexts.
FAQ
Frequently Asked Questions
No. A charge-off means the creditor has written it off as a loss for accounting purposes, but the legal debt obligation often remains, and they may still attempt to collect or sell it.
In the United States, a charge-off can remain on your credit report for seven years from the date of the first missed payment that led to the default.
In finance, they are often synonymous. 'Charge-off' is the specific term used in banking and credit reporting, while 'write-off' is a more general accounting term for reducing the value of an asset to zero.
It can be disputed if inaccurate. If accurate, it will age off after the reporting period. Sometimes creditors agree to 'pay for delete' settlements, but this is not guaranteed.
A debt that a creditor writes off as uncollectible.
Charge-off is usually formal, business/finance in register.
Charge-off: in British English it is pronounced /ˈtʃɑːdʒ ɒf/, and in American English it is pronounced /ˈtʃɑːrdʒ ɔːf/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “It's a complete charge-off.”
Learning
Memory Aids
Mnemonic
Think of a bank CHARGing a debt OFF its books, like taking a charge off a battery – it's removed.
Conceptual Metaphor
DEBT IS A BURDEN / REMOVING A BURDEN
Practice
Quiz
In which context is 'charge-off' most accurately used?