Declines in Credit Card Charge-Offs & Delinquencies

October 1, 2012, Written By Bill Hardekopf
Declines in Credit Card Charge-Offs & Delinquencies

Another credit card report shows that charge-offs and delinquency numbers continue to fall.

Last week, Moody’s Investors Service found that credit card charge-offs fell from 4.56 percent in July to 4.19 percent in August. The credit card charge-off rate is percentage of total credit card balances that is unlikely to be collected.

The credit card delinquency rates also improved in August according to Moody’s. The figure dropped from 2.36 percent in July to 2.32 percent in August. The delinquency rate is the percentage of accounts where the monthly payment is more than 30 days past due.

A number of factors are contributing to these decreases. Cardholders are carrying less credit card debt, having learned their lesson during the economic downturn where high APRs on their cards led to steep high interest rate penalties on their balances. In addition, credit card issuers made a number of changes after the economic downturn to decrease their financial risk on credit card loans: they slashed the credit limits on millions of accounts; they closed risky accounts; and tightened credit card approval rates, making it difficult for people with average or poor credit scores to be approved for a new account.

The information contained within this article was accurate as of October 1, 2012. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Bill Hardekopf

Bill Hardekopf is the CEO of and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
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