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Equifax report shows credit card write-offs falling sharply

According to Equifax, one of the three nationwide credit reporting bureaus, the rate at which credit card loans must be written off has fallen dramatically since 2010.
 
The company's National Credit Trends Report announced that card charge offs are currently 5.53 percent, which is 39 percent lower than levels in 2010. Charge offs of card accounts offered by retail stores is 26 percent lower than last year's, which was at eight percent, Credit Union Times reports.  
 
“Declining write-offs, growing card originations and the stabilizing of card balances are a precursor to balance increases, which can help to return the banks to profitability in this lending sector,” Michael Koukounas, the senior vice president of Special Client Services for Equifax, said, according to Credit Union Times.
 
The balances of cumulative revolving cards peaked in October 2008 with more than $752 billion and has since declined by nearly 20 percent despite a recent uptick due to seasonal purchase activity. December cumulative balances for revolving cards stand at $604 billion. Consumers total debt load has also dropped.
 
“The industry is experiencing sustained improvement in consumers’ payment behavior and overall reduction of debt, a trend that seems to indicate more responsible lending and borrowing habits among card issuers and consumers alike,” Koukounas said, according to Credit Union Times.
 
The firm reported that total consumer debt outstanding, including bank credit cards, retail credit cards, student loans, auto, consumer finances, home equity and first mortgages, peaked in October 2008 at $12.5 trillion. In December, consumers in the United States carried $11.1 trillion in consumer debt, which is a decrease of more than 10 percent.

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