Charge offs, delinquent credit card payments drop in May

Credit card charge offs fell in May, according to Moody’s Investors Service Credit Card Indices Report.

The decline last month marks the second consecutive month charge offs decreased, according to Moody’s. The number of people making late credit card payments also dropped in May, following a downward trend that has been taking place for seven straight months.

Experts believe new government regulations may be contributing to the most recent credit card payment findings.

“We note that that the August implementation of Credit CARD Act rules limiting penalty fees, and the eventual expiration of some issuers’ principal discounting initiatives will likely place downward pressure on yields,” says Moody’s analyst Jeff Hibbs. “However the negative effect on excess spread from lower yields, should at least be partially mitigated by the positive effects from lower charge off rates.”

President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure Act last year. One of the Act’s provisions requires card issuers to deliver statements at least 21 days prior to the payment’s due date, which gives consumers more time to manage their finances and pay their debt.