August 17, 2010
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News: Credit Card Debt Spreads Across The Globe
Things are looking up for the financial industry as credit card defaults continue to decline; a sign that the recession has come to an end and the economy is taking a slow turn around. One of the first lenders to report last month's financials, Chase showed that both credit card delinquencies and defaults fell. According to the company's regulatory filing on Monday, card defaults fell to 7.88 percent down from 8.32 percent in June. The nation's top credit card company also reported card delinquencies of 30 days or more past due dropped slightly in July to 4.25 percent; down from 4.3 percent in June.
Bank of America, one lender that was hit the hardest during the recession, also reported a slight decline in credit card defaults in July to 11.39 percent; down from 11.98 percent in June. Card delinquencies fell in July as well to 5.92 percent from 6.16 percent in June. Citibank, another top U.S. bank that suffered excessive losses during the recession, also reported a slight decline in credit card delinquencies and defaults. Although defaults remain high, they did decrease from 10.72 percent in June to 9.1 percent for July. During its regulatory filing, Citibank noted that the company discovered an error in their accounting methods which caused some accounts to be written off twice. Originally in June the bank had reported defaults of 11.46 percent. Citi's early stage delinquencies also decreased to 8.32 percent in July; down from 8.58 percent the previous month.
The financial industry has been plagued with record breaking credit card delinquencies and defaults over the past 18 months reaching a national overall rate of over 10 percent. Over the past three months. As the U. S. begins its slow return to financial recovery, Asia's largest country continues to see card defaults climb. The Republic of China, like the rest of the world, has slipped into a recession and reported a whopping 14.4 percent default rate. Meanwhile, China's early stage delinquencies continue to run in the double digits. The country's card distribution recently realized a 14.9 percent increase which most likely played a major role in the country's high defaults.