Credit card defaults drop, charge offs decline
Americans continued to make payments and avoided racking up credit card debt in September, according to a new lending industry report.
Credit card defaults, dropped to their lowest total since mid-2008 this week, as delinquency rates continued to improve.
The report by Fitch’s Prime Credit Index found that late stage delinquencies improved for the ninth straight month, with 60-day late payments on credit cards reaching falling to 3.5 percent – a new two-year low. Early stage delinquencies improved only 1 percentage point; however, the total represented a 17 percent decline from 2009.
“Although still high on a historical basis, credit card defaults have been relatively stable albeit over the last few months while delinquencies have improved considerably,” said managing director Michael Dean of Fitch Ratings. “To the extent we saw some improvement in the employment situation, particularly on the new jobless claims front, we could foresee further improvements charge offs.”
After a small rise in August, credit card charge offs declined to 9.22 percent. The index, which surveys major lenders, including Bank of America, Citibank, Chase and Discover fell to a new 18-month low.