Feb. 17 (Bloomberg) -- American Express Co., the biggest U.S. credit-card company by purchases, fell the most in 10 weeks of New York trading after overdue loans worsened in January.

The lender declined $1.78, or 11 percent, to $13.96 at 4:15 p.m. New York Stock Exchange composite trading, the lowest value since 1996. Defaults on loans packaged into securities rose to 8.29 percent from 7 percent in December, while payments at least 30 days overdue climbed to 5.28 percent from 4.86 percent the month earlier, American Express said today in a filing.

“The expectation was it wasn’t going to get this bad this fast, but it’s getting pretty bad, pretty quickly,” said John Williams, an analyst at Macquarie Capital in New York with an “underperform” rating on American Express. “As fewer people have jobs, fewer people can pay their bills.”

Consumers fell behind on credit-card payments as U.S. unemployment rose last month to 7.6 percent, the highest rate since 1992. American Express got $3.39 billion from the U.S. Treasury last month to boost capital as surging consumer defaults forced it to set aside more reserves and the market for bonds backed by credit-card debt seized up.

Capital One Financial Corp., the McLean, Virginia-based credit-card company, declined 16 percent to $10.13 after saying today that defaults rose to 7.82 percent and late payments reached 5.02 percent. Discover Financial Services, the Riverwoods, Illinois-based credit-card company, fell 13 percent to $6.10.

American Express said last month that fourth-quarter profit from continuing operations fell 72 percent to $238 million as more consumers defaulted. Capital One posted a surprise $1.42 billion fourth-quarter loss after it added $1 billion to loss reserves. The lender expects $8.6 billion in soured loans in the next year.

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To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Last Updated: February 17, 2009 16:22 EST