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Report shows Americans more focused on paying credit card bills on time

Written on July 5, 2010 – 7:15 pm | by Alicia Ross

The number of Americans paying credit card bills late has declined, report shows

It appears that consumers are putting themselves in a slightly better financial position, according to a new report that reveals credit card late – stage delinquency rates have declined for the fifth consecutive month. Delinquency rates are utilized by financial experts to measure future losses. The current declines recorded suggest that charge off rates may also decrease in the coming months.

“Seasonal factors are influencing the improvement in delinquencies and could benefit charge offs in the coming months,” Fitch Ratings managing director Michael Dean said. However, “Employment trends remain vital to any meaningful and sustained improvement taking hold.”

The Credit Card Index – published by Fitch – shows that the delinquency rate for payments 60 or more days overdue has dropped 17 basis points, falling to 4.01 percent in May. The new rate marks a 17-month low. While the rate is still higher than most economists want to see, delinquencies have improved from those seen in May 2009, which stood at 4.33 percent.

Additionally, the rate for payments 30 days or more overdue dropped by 26 basis points, falling to 5.27 percent and marking the third month of steady declines.

Despite the decline in delinquency rates, the Index registered a small increase in charge offs, which climbed 3 basis points reaching 11.13 percent. May’s charge off figures represent a 7 percent increase from those seen one year prior. Regardless, experts see the Index as a hopeful sign that the economy may be slowly improving.

“Given their resiliency in the face of higher chargeoffs and delinquencies, ratings on senior credit card ABS should remain stable,” Fitch senior director Cynthia Ullrich commented.

To add to the positive outlook, the Commerce Department recently released a report showing that consumer spending – which accounts for 70 percent of the economy – grew by 0.2 percent in May.

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