U.S. credit card charge-off rates that began rising in the fall of 2008 likely hit their peak during the first quarter of this year and are beginning a march back to lower levels, Moody’s Investors Service announced today.
The charge-off rate on outstanding consumer credit card receivables in April was 10.91%, down 30 basis points from 11.21% in March. Combined with other indicators, this represents “strong evidence” that the recent trend of continually rising chargeoffs is beginning a reversal, Moody’s says.
“April’s improved charge-off rate, combined with our base-case expectation for the unemployment rate to plateau at 10.1% in the second half of the year and steadily improving delinquencies, support the long-awaited call that credit card chargeoffs have indeed reached an inflection point,” Moody’s analyst Jeff Hibbs said in a statement.
The credit card delinquency rate for payments at least 60 days past due fell in April for the sixth consecutive month to 5.54%, the lowest rate since November 2008, Moody’s said.
