Further Declines in Credit Card Defaults and Delinquencies
More Americans are paying their credit card bills on time as well as carrying less of a balance.
According to figures from last week’s regulatory filings, credit card delinquencies decreased for each of the top six credit card issuers in May. Delinquencies are defined as payments late by at least 30 days.
In addition, the charge-off or default rate declined in May for five of the six top issuers. Discover was the exception. These charge-off rates are the percentage of loans that are considered uncollectible.
A recent TransUnion study showed the average credit card debt per borrower decreased 4.7 percent or $242, from $5,204 in the fourth quarter of 2011 to $4,962 in the first quarter of 2012.
These latest figures show that both banks and consumers have learned from the painful lessons of the recent recession. Consumers are wise to pay down their debt and do so on time. In addition, fewer delinquencies and smarter lending practices are good for banks.
Here are the default and delinquency rates for the major issuers:
Charge-off rate fell from 2.4 percent in April to 2.2 percent in May. The delinquency rate fell from 1.3 percent in April to 1.2 percent in May.
Bank of America
Charge-off rate fell from 5.69 percent in April to 5.52 percent in May. The delinquency rate fell from 3.45 percent in April to 3.32 percent in May.
Charge-off rate fell from 4.07 percent in April to 3.85 percent in May. The delinquency rate fell from 3.18 percent in April to 3.14 percent in May.
JP Morgan Chase
Charge-off rate fell from 4.19 percent in April to 3.93 percent in May. The delinquency rate fell from 2.21 percent in April to 2.09 percent in May.
Charge-off rate fell from 5.93 percent in April to 5.20 percent in May. The delinquency rate fell from 2.71 percent in April to 2.55 percent in May.
Charge-off rate rose from 2.60 percent in April to 2.65 percent in May. The delinquency rate fell from 2.04 percent in April to 1.93 percent in May.