I got excited when American Express (NYSE:AXP) showed big improvements in the quality of its credit card portfolio last week. Maybe the credit card industry was turning a corner? Maybe the American consumer wasn't as beaten down as assumed? Maybe? Maybe?

No such luck, Fools. The excitement lasted about 20 minutes, until I saw Capital One's (NYSE:COF) earnings.

Net income for the third quarter came in at $425.6 million, or $0.94 per share, compared with $374.1 million, or $1.00 per share, in the same period last year. That headline number pleased investors, who bid up shares almost 7% on Friday. Chalk that up to a market that expects nothing great, because digging a little deeper tells the story of a bank still very much under attack from mean ol' Mr. Recession:


Q3 2009

Q2 2009

Q3 2008

Credit Card 30-Day Delinquencies




Credit Card Net Charge-Off Rate




Total Purchase Volume

$26.0 billion

$25.7 billion

$29.4 billion

The increase in both early stage delinquencies and net charge-offs is in stark contrast to the sequential improvements put up by American Express last week. Bank of America (NYSE:BAC), which holds the honor of the highest credit card default rate among major peers, also experienced sequential declines in delinquencies in the third quarter -- a great sign when it comes to future losses. Deceleration in the unemployment rate and the "wealth effect" of rising equity markets seemed to be helping some lenders ever so slightly. But Capital One? It's still surrendering to the powers of a hungover U.S. consumer.

Granted, other banks like JPMorgan Chase (NYSE:JPM) experienced increases in early stage credit card delinquencies, too. But balance-sheet diversification makes that weakness almost negligible. Capital One has fully half of its eggs in the credit card loan basket. When you're that reliant on one segment, you'd better be darn sure that segment has enough oomph to stay competitive with peers. Yet its only heavily card-focused rival, American Express, is quickly proving to be in a different league when it comes to credit quality. American Express is in recovery mode. Leaving the darkest days in the past. Already healing from the Great Recession.

Where's that leave Capital One? Prone to being pointed and laughed at, I'd say. 

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. American Express is a Motley Fool Inside Value selection. The Fool has a disclosure policy.