U.S. consumers returning to credit card use

Financial experts say they are seeing continual positive credit trends as U.S. consumers gradually return to their credit cards, signaling increased stability for credit card portfolios.

Dow Jones Newswires analyzed a recently issued Moody’s Investors Service report and noted a decrease in both credit card delinquency and charge-off rates.

According to Dow Jones, the charge-off rate fell to 6.95 percent, down from 7.16 percent in April. Delinquency rate-accounts, for which a monthly payment is more than 30 days overdue, fell to 3.30 percent, from 3.53 percent last month, its 19th straight month of improvement.

The payment rate, a gauge of credit card customers’ ability to pay their balances, jumped to 21.57 percent, Dow Jones reports.

An Associated Press article examining Moody’s data and reported that the charge-off rate was in similar territory during the fall of 2008, during the beginning of the recession. The average charge-off rate was 6.75 percent in October 2008, and the following month it rose to above seven percent and continued to climb, peaking at 11.08 percent in February 2010.
The AP reported that the low early-stage delinquency rate set an all-time low.

In the report, Moody’s analysts predicted that charge-off and delinquency rates will continue to decline into the next year.

Comments are closed.