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Consumers Had a Better Time With Their Credit Cards in December

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Consumers Had a Better Time With Their Credit Cards in DecemberAll six of the nation’s largest credit card issuers reported that the number of charge offs – accounts so behind in payments that they have to be written off as uncollectable – dipped in the final month of 2010, according to a report from The Associated Press. Citibank, which has been plagued by defaulted accounts more so than any other lender, saw the biggest drop as charge offs fell to 8.34 percent, down from 9.4 percent in November.

“There are some good improvements,” Mike Dean, a managing director at industry tracker Fitch Ratings, told the news agency. “We’ve seen some better numbers there, but nothing to say, ‘Wow!'”

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Overall, the charge off rate for the entire industry peaked at 10.37 percent in the second quarter of 2010, the report said. Prior to the recession hitting, that figure averaged just 3.82 percent over the previous two years.

Meanwhile, all six of these companies saw payments 30 or more days behind declined as well, the report said. That bodes well for the future of defaults, as delinquency is often viewed as a predictor of charge offs.

However, some industry experts believe the decrease in charge offs may not be due solely to consumers being more conscientious about reducing their credit card debt, but rather, the result of the mass charge offs of 2009 and 2010 keeping deeply troubled borrowers from obtaining new lines of credit.

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