Late payments, charge offs on credit card accounts fall, Fitch reports CreditCardsMasterInfo

Late payments, charge offs on credit card accounts fall, Fitch reports

Filed Under (Financial News) by Amber Cook on 05-08-2010

Credit cards that were in default or late on payment fell recently.
Credit card debt was a problem for many consumers throughout the recession, though recent figures from Fitch Ratings show some people have managed to make a dent in what they owe.

According to the firm, the amount of accounts in default fell to 10.93 percent during the March payment period. Although this represented a 0.34 percentage point decline on February, it is still higher than the 10.69 percent average charge off rate seen in the last 12 months.

However, delinquencies on credit card accounts also fell, which could bode well for future charge off rates. Early-stage delinquencies – accounts that are more than 30 days late – dropped to 5.74 percent, while 60-day delinquencies fell 0.17 percentage points to 4.27 percent.

Michael Dean, managing director of Fitch Ratings, said that default and delinquency rates should exhibit positive seasonal gains, though levels will remain high as questions remain in the labor market.

“Emerging signs that the consumer recovery may be in effect could translate to lower charge off rates later in the year although we need to realize sustained improvement in the labor markets,” Dean said.

Since a high of 10.1 percent in October 2009, the unemployment rate dropped to 10 percent in November and December. A further decline was seen in January, when it dropped to 9.7 percent. That rate has been maintained through the first three months of 2010.

While the unemployment rate has continued to fall, so has the amount of consumer credit. The Federal Reserve Board reported that revolving consumer credit – mostly made up by card debt – dropped at an annual rate of 13.1 percent in February. In all, 2009 saw revolving credit fall by 9.6 percent.

Personal Finance and Money Management