September 03, 2010
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News: U.S. Credit Card Defaults Hit 15 Month Low
There has been a great deal of press on the efforts by Americans to reduce credit card debt. According to the most recent report from Fitch Ratings, their efforts are paying off. Fitch Ratings show that U.S. card defaults fell in July to a 15 month low. According to the Fitch Prime Credit Card Charge-off Index, card defaults fell to 9.65 percent. Although the rate fell below the 10 percent for the first time in 15 months, it continues to remain significantly higher than the previous average of 5.88 percent. Nevertheless, the news is encouraging as Americans continue to decrease credit card debt while fulfilling their monthly responsibilities. Card defaults typically mirror the nation's unemployment rate which continues to hover around 10 percent as well. Banks write card debt off after the account becomes 180 days past due.
Americans continue to improve on making credit card payments on time. Card payments that are 60 days or more past due fell for the 7th consecutive month in July to 3.76 percent; down from the previous month's rate of 3.86 percent in June. These late stage delinquencies hit a 19 month low. Early stage delinquencies also improved. For the 5th consecutive month, payments of 30 days or more past due dropped to 5 percent in July down from 5.13 percent in July. Delinquencies are important because they provide an indication of future credit card defaults.
Fitch is a global leader that offers its rating indexes which provides the financial industry with independent and prospective credit opinions, research, and data. The company has 50 offices worldwide and services over 150 countries with the Fitch's credit card indexes. The company's ratings are widely recognized by investors, card issuers, and bankers for its credible, transparent, and timely coverage. The company is headquartered in New York and London. Fitch's card index includes general purpose portfolios of the top card issuers in the nation including Chase, Banks of America, Citibank, and Capital One.