In what could be a sign that consumers are in a better position to pay down their existing credit card debt, the rate at which the nation’s top lenders were forced to set aside funds to cover defaulted accounts slipped considerably.
The latest statistics from Fitch Ratings showed that credit card losses for the nation’s seven major lenders declined at an average rate of 6.34 percent in the first quarter of the year, driven largely by improvements in short-term unemployment, according to a report from Dow Jones Newswires. That rate is down from 7.19 percent in the final three months of 2010, and a drop from 9.79 percent in the same quarter last year.
The improvements are seen as being almost entirely positive for the credit card industry, which has been slower to recover than some segments of the lending landscape, the report said. However, for losses to continue their current declining rates lenders will have to more aggressively expand their portfolios.
The credit card industry may have been slower to improve because many borrowers were wary of taking on more debt in the wake of the national financial meltdown.