June 16, 2010
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News: U.S. Credit Card Delinquencies Down For May
Reports from the top U.S. lenders indicate cardholders are finding greater ease in getting their monthly credit card payments in on time. According to Rueters, all of the six top lenders reported 30 day delinquencies decreased during the month of May while five of the six reported credit card defaults dropped. It was the fifth consecutive month that the U.S. has seen delinquencies drop. Since card delinquencies are a strong indicator of what to expect three or four months down the road with respect to defaults, the country should continue a downward trend in card write-offs as well. Overall, May was an improved month; five of the six U.S. lenders, reported a slight decrease in credit card defaults. Discover Financial was the only company to write off more card debt in May than in the previous month. The lender and processor wrote off 8.82 percent in May up from 8.42 percent in April.
Again, at the front of the line is American Express with the lowest credit card delinquency rate. American Express reported 30 day delinquencies of 2.9 percent in May, down from 3.1 percent in April. On the other end of the spectrum is Bank of America (BofA) once again with the highest delinquency rate. However, BofA did report a .34 percent decrease in 30 day delinquencies to 6.39 percent for May. Although Discover didn't fare as well with card defaults, its 30 day delinquent credit card accounts fell to 4.95 percent in May down from 5.20 percent April; a sign of fewer defaults down the road.
Despite the fact that credit card delinquencies and defaults continue to decline, they remain at elevated levels. The country appears to be returning to economic stability, however, at a very slow pace and may take some time before returning to some kind of balance. The reason? Unemployment remains very high and will continue to hover at elevated numbers until the country sparks new ways to boost the economy and job market. Bank of America has been the first bank to make significant plans to focus on increasing financial support in the small business sector. Since BofA's announcement earlier this month. To date, no other major U.S. lender has jumped on the bandwagon.