Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
Credit card charge-off rates declined in October
NEW YORK (12/6/11)--Credit card charge-offs in the U.S. in October fell six basis points to 5.21% from 5.27% in September and 8.79% in October 2010, according to Moody's Credit Card Indices.

October's charge-offs were at their lowest level since 2007. Moody's said it expects charge-offs to continue to decline well into next year and push the rate to below 4% by year-end 2012.

"Following the sizeable, 75-basis point decline in the charge-off rate in September, driven in part by seasonal trends, the continued improvement in October is notable," said Jeffrey Hibbs, assistant vice president at Moody's. "Earlier in the decade, sharp charge-off improvements in September were typically followed by increases in October, a pattern that has been broken now for the past three years," he added.

The charge-off rate measures credit card account balances written off as uncollectible as an annualized percentage of total outstanding principal balance, said Moody's Investor Service in a release late last month.

The delinquency rate--which measures the portion of account balances that a monthly payment is more than 30 days late as a percent of total outstanding principal balance--continued to hold steady at an all-time low of 3.04%, said Moody's.  Early stage delinquencies were one point lower at 0.86%, near where they have hovered the past seven months.

That means the pace of further improvement likely will be muted, said Hibb, who noted, "the calendar is moving into a period that suggests seasonal declines in the early-stage delinquency rate in the coming months."

The payment rate,  a measure of the average amount of principal that cardholders repay each month as a percentage of total outstanding principal balance,  slipped below 21%  for the first time since April. The October payment rate was 20.91%, or one percentage point below the all-time high reached in August.

"Historically, low delinquencies and high payment rates reflect the improved borrower mix in credit card trusts today as weak borrowers have charged off at record levels in the recent recession and originators have added few new accounts to the securitizations," Hibbs said.

In credit unions, loan delinquency also continued its year-long decline, with the rate in October at 1.57%. That is a decrease from 1.59% in September and 1.76% in October 2010, according to the Credit Union National Association's Monthly Credit Union Estimates for October, which was released Monday.


RSS print
News Now LiveWire
#FreeGasFriday courtesy of @tvfcu, TN #creditunions http://t.co/wDRFYJVlpz
10 hours ago
If you were unable to watch or attend @cuna 's @thehill Hill forum on Wed., you can now watch the archived version: http://t.co/FhUnp7HbU8
11 hours ago
Time is running out. If you haven't taken the #NewsNow readership survey, please click here now: http://t.co/4Gp6C2Wa4o
11 hours ago
African financial inclusion possible with mobile money: @IMFNews study http://t.co/0V5DTQToxY
12 hours ago
Louise Herring's birthday is Saturday. 105 years later, her legacy lives on through her kids http://t.co/oMqGADmo0d http://t.co/T3NmS9NqEY
13 hours ago