The twin effects of lenders keeping a tight rein on credit card lines and consumers borrowing less with cards in April drove the average card-account default rate down to levels not seen since February 2009, according data Fitch Ratings released Friday.
The average credit card charge-off rate fell 46 basis points to 7.42% from 7.88% in March, putting it on par with the average charge-off rate 26 months ago when fallout from the recession was first becoming apparent, Fitch said.
The delinquency rate on credit card accounts at least 60 days past due fell 18 basis points to 2.75% from 2.93% in March, continuing a 16-month streak of declines. The delinquency rate on accounts at least 30 days past due declined 27 basis points, to 3.54% from 3.81%.
In a slight aberration, the average charge-off rate on private-label credit cards in April rose 17 basis points to 10.59% from 10.42% in March, Fitch said.
Despite the incremental uptick in retail-account defaults, consumer credit quality overall continues to “gain momentum” as more consumers pay off credit card debts, Fitch said
“Charge-offs are diverging from persistently high unemployment and underemployment rates due partly to tighter underwriting and U.S. consumers chipping away at their debt levels,” Michael Dean, Fitch managing director, said in a press release.
