New accounts grew 17% to 6.2 million and average active accounts increased 5% to 67.2 million during the period.
This translated to an 11% increase in purchase volume per active account during the third quarter and 16% growth in total purchase volume compared to last year.
Of course, this strength in purchase volume was largely offset by the persistently elevated payment rate trends resulting from government stimulus and industrywide forbearance actions, leading to a 2% increase in loans, including loans held for sale.
Net interest margin of 15.45% was 165 basis points higher than last year, primarily reflecting the reduction in excess liquidity.
Operating expenses were down 10% compared to last year and down 7% year-to-date as our cost efficiency initiatives continue as planned.
We remain on track to reduce about $210 million from our expense base by year-end even as we continue to invest in our business.
The efficiency ratio was 38.7% for the quarter largely flat with last year.
Net charge-offs were 2.18% for the third quarter, down 224 basis points from last year.
Net earnings were $1.1 billion or $2 per diluted share and included a $0.33 benefit from the reserve release related to the reclassification of the Gap portfolio to held for sale.
Turning to our balance sheet, deposits were down $3 billion or 5% versus last year, reflecting retail deposit rate actions we took to manage our excess liquidity.
Deposits represented 82% of our funding mix at quarter-end, a slight increase versus last year due to the retirement of debt.
During the quarter, we returned $1.4 billion in capital through share repurchases of $1.3 billion and $124 million in common stock dividends.
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With more than 65 million active accounts, Synchrony has market-leading reach and deep diverse lending insights that enable us to better anticipate the needs of customers and therefore which financing options will optimize utilization and drive lifetime value.
We're particularly excited about the opportunity we see for our Synchrony Mastercard, which allows us to tap into the $500 billion general purpose credit card market.
This value proposition and seamless digital experience resonates very well with our customer, leading to purchase volume growth of 36% versus the same period in 2019.
We're also seeing higher levels of engagement around the product and brand as spend per active account is up 40% versus 2019.
The combination of these results led to $1.1 billion in net earnings or $2 per diluted share, a return on average assets of 4.9% and a return on tangible common equity of 40.1%.
Looking at our third quarter performance in greater detail, beginning with purchase volume, which grew 16% compared to last year and 16% compared to 2019 excluding Walmart demonstrates clear broad-based strength in consumer demand.
This is also reflected in our purchase volume per account, which increased 11% compared to last year.
Dual card and co-branded cards accounted for 40% of the purchase volume in the third quarter and increased 29% from the prior year.
On a loan receivable basis, excluding the impact of the reclassification of the Gap portfolio to held for sale, dual and co-branded cards accounted for 24% of the portfolio and increased 4% from the prior year.
Average active accounts increased 5% compared to last year and new accounts increased 17% totaling more than 6 million new accounts in the third quarter and over 17.5 million new accounts.
In late August, we reached an agreement for the sale of the Gap portfolio, which led to the reclassification of $3.5 billion of loan receivables to held for sale and therefore reduced our ending loan receivables balance.
Excluding the impact of the reclassification, loan receivables would have increased by 2% versus the prior year as the period's strong purchase volume growth was largely offset by a persistently elevated payment rate.
Payment rate for the third quarter was approximately 200 basis points higher when compared to the last year.
Interest and fees on loans increased 2% compared to last year, reflecting similar growth in average loan receivables.
Net interest income was 6% higher than last year, primarily reflecting a decline in interest expense due to lower benchmark rates.
RSAs were $1.3 billion in the third quarter and 6.38% of average receivables.
The $367 million year-over-year increase primarily reflected the impact of the lower provision for credit losses and continued strong program performance including growth and improvement in net interest income.
Now when you think about the combined $1.4 billion year-over-year improvement in net interest income, net losses and the reserve change, we shared $367 million of that through the RSA.
Focusing on our credit performance, provision for losses was $25 million.
Included in this quarter's provision was reserve release of $407 million which incorporated our continued strength in credit performance and we're optimistic macroeconomic environment and the impact of reclassifying our Gap portfolio loan receivables to held for sale.
This resulted in a reserve reduction of approximately $247 million.
Other income decreased $37 million, generally reflecting higher loyalty program costs from higher purchase volume during the quarter.
Other expense decreased $106 million compared to the prior year.
As you recall, last year we recognized an $89 million restructuring charge and we continue to see favorability from lower operational losses.
The 10% year-over-year increase in Home & Auto was generally driven by strong retailer performance across almost all verticals while purchase volume in Diversified & Value increased 25% reflecting the continued return to in-person retail experiences.
In Digital, the 21% increase was due to broad-based growth across our partners coupled with growth in our new programs with Verizon and Venmo.
In Health & Wellness, the 10% growth in purchase volume primarily reflected consumers being more comfortable with the environment and undergoing planned procedures.
Meanwhile, purchase volume grew a more modest 2% in lifestyle reflecting broad-based growth across the platform, but having a tough comparable to last year's strong growth in power sports.
Average active account trends ranged on a platform basis up by as much as 10% in Diversified & Value and 7% in Digital while Home & Auto and Health & Wellness average active accounts were generally flat.
Payment rates were approximately 260 basis points higher than our five-year historical average.
That said, we've begun to see some signs of moderation in certain cohorts as payment rate was about 200 basis points higher year-over-year compared to almost 300 basis points higher year-over-year comparison in the second quarter.
Interest and fees were up approximately 2% in the third quarter reflecting [Phonetic] average loan receivable growth.
Net interest income increased 6% from last year reflecting the year-over-year improvement in interest and fees as well as lower interest expense for the period.
The net interest margin was 15.45% compared to last year's margin of 13.8%, a 165 basis point improvement year-over-year driven by the mix of interest earning assets and favorable interest bearing liabilities costs.
More specifically, the mix of loan receivables as a percent of total earning assets increased by 550 basis points from 78.3% to 83.8% driven by lower liquidity held during the quarter.
This accounted for 106 basis point increase in our net interest margin.
Interest bearing liabilities costs were 1.31%, a year-over-year improvement of 59 basis points primarily due to lower benchmark rates and funding mix.
This provided a 51 basis point increase in our net interest margin.
The loan receivables yield was 19.59%, a year-over-year improvement of 10 basis points.
This resulted in an 8 basis point improvement in our net interest margin.
Our 30-plus delinquency rate was 2.42% compared to 2.67% last year.
Our 90 plus delinquency rate was 1.05% compared to 1.24% last year.
It should be noted that removing the impact of the Gap program from the third quarters of this year and last year, the 30-plus delinquency metric would have been down about 40 basis points versus 25 basis points and the 90 plus metric would be down about 25 basis points instead of 19 basis points.
And in terms of our portfolio's loss performance, our net charge-off rate was 2.18% compared to 4.42% last year.
Our allowance for credit losses as a percent of loan receivables was 11.28%.
Overall expenses were down $106 million or 10% from last year to $961 million primarily reflecting the impact of the prior year's restructuring charge of $89 million and lower operational losses.
The efficiency ratio for the third quarter was 38.7% compared to 39.7% last year.
Our deposits declined by $3.2 billion from last year and our securitized and unsecured funding sources declined by $3 billion.
This resulted in deposits being 82% of our funding, compared to 80% last year with securitized and unsecured funding each comprising 9% of our funding sources at quarter-end.
Total liquidity including undrawn credit facilities was $18.4 billion which equated to 20% of our total assets, down from 28% last year.
With this framework, we ended the quarter at 17.1% CET1 under the CECL transition rules, 130 basis points above last year's level of 15.8%.
The Tier 1 capital ratio was 18% in the CECL transition rules compared to 16.7% last year.
The total capital ratio increased 120 basis points to 19.3% and the Tier 1 capital plus reserves ratio on a fully phased in basis decreased to 26.6% compared to 27.3% last year.
During the quarter, we returned $1.4 billion to shareholders, which included $1.3 billion in share repurchases and $124 million in common stock dividends.

Summary:
Net earnings were $1.1 billion or $2 per diluted share and included a $0.33 benefit from the reserve release related to the reclassification of the Gap portfolio to held for sale.
Average active accounts increased 5% compared to last year and new accounts increased 17% totaling more than 6 million new accounts in the third quarter and over 17.5 million new accounts.
Focusing on our credit performance, provision for losses was $25 million.