July 29, 2010
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News: More Good News From Fitch
The latest report by Fitch Ratings indicates that Americans have been struggling less these days with making credit card payments. Another sign that the economy has begun to turn around. According to the Fitch Ratings, for the sixth consecutive month credit card delinquencies fell. For the month of June, delinquencies of 60 days or more fell to 3.86 percent in June down from 4.01 percent the previous month. While Americans were doing a better job paying their card payments, the percentage of delinquencies fell below 4 percent for the first time in 18 months. Delinquencies of 60 days or more are important because they are an indication of what to expect in the future with regard to credit card write-offs.
Another sign that credit card delinquencies are on a downward trend is that early stage delinquencies of 30 days also dropped to 5.13 percent in June down from 5.27 percent in May. This was the fourth consecutive month that early stage delinquencies have fallen. Banks write off card balances when payments become 180 days past due. Those prime credit card balances that banks wrote-off as reported on Fitch's prime charge-off index declined as well to 10.57 percent down from 11.13 percent in May. The decrease was the first annual improvement in three years.
Although credit card delinquencies continue to improve, any significant improvement is expected to take some time as unemployment continues to remain high; hovering around 10 percent. Fitch Ratings is an international credit rating agency dual-headquartered in New York City and London. The company produces the Fitch Credit Card Index which includes card portfolios belonging to the nation's top lenders including Bank of America, Citibank, Chase, Capital One, and Discover. Fitch Ratings Inc. is one of the three Nationally Recognized Statistical Rating Organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975 along with Moody's and Standard & Poor's (S&P).