August 25, 2010
-
News: Credit Card Defaults Lowest In 14 Months
Once again Moody's Credit Card Indices is evidence that the recession has ended and cardholders are doing a better job at paying down debt. Moody's Investors Service released their report on Monday that showed overall U.S. credit card defaults fell to 9.3 percent in July. The decrease was the fourth consecutive month that Americans decreased debt and the first time in 14 months that the charge-off rate fell below 10 percent. Last month, Moody's report speculated that credit card defaults had previously peaked and that the financial industry should see a gradual decline throughout the balance of 2010. The charge-off rate typically mirrors the U.S. unemployment rate which continues to hover around the 10 percent mark.
Meanwhile, the Credit Card Indices Report reported that the credit card delinquency rate for accounts that are 30 days or more past due fell for the ninth consecutive month, to 4.93 percent. The decrease was the first time in 20 months that card delinquencies fell below the 5 percent mark. Although this is good news for the nation, some experts believe the country could see an increase in card delinquencies due to summer vacation spending and the anticipation of the upcoming holiday season.
The Associated Press announced that American consumer credit card debt is at its lowest in 8 years. Furthermore, TransUnion Credit Reporting Bureau reported that the average American debt is $4,951 down 13 percent from last year's average for the same time period of $5,719; another sign that Americans are working hard to pay down debt. TransUnion noted that the average debt is the first time since first quarter 2002 that the average card debt fell below $5,000. Alaskans are carrying the highest card debt, with an average debt of $7,148; while residents of Alabama have done the best job with an average of $4,753 debt.