There has been a steady decline in the charge off rates over the past few months as the economy struggles to recover. While credit card issuers are still finding a way to make a profit, one thing has them fearing for the worst: Americans have learned how to pay off their credit card debt.
American Express, Discover and Bank of America are just a few of the issuers seeing their revenue slowly dwindle in areas where they should be making more money, such as interest rates and fees. New credit card legislation hasn’t helped, giving consumers an upper hand on protection and transparency, according to the Wall Street Journal.
“Consumer de-leveraging by definition means that consumers are paying down debt rather than spending and borrowing,” Capital One’s chief executive Richard Fairbank told the Journal. “While this pressures loan growth, it also contributes to the improvement in delinquencies and charge offs.”
By paying off debt in a timely manner, consumers can maintain their credit scores and remain appealing to lenders in the future.