Recent data indicating that U.S. consumer credit card delinquency rates continue to improve is a positive for card issuers, despite what analysts view as a short-term uptick in U.S. consumer credit card defaults during February.
Average credit card charge-offs rose 26 basis points in February, to 8.31% from 8.05% the previous month, Fitch Ratings said in an April 6 report. The results marked the first increase in charge-offs in six months, Fitch said.
But the increase was “more reflective of seasonal factors like a rise in tax season bankruptcy filings and less a precursor to worsening credit trends,” Michael Dean, Fitch managing director, said in a press release.
Charge-off rates on credit cards have fallen sharply since hitting a high of 11.37% in February 2010, although they remain higher than historical averages, which have hovered at just above 6% for most of the past 20 years, according to Fitch.
The average charge-off rate on private-label credit cards rose 31 basis points, to 10.95% from 10.64%, after declining for three consecutive months, which Fitch attributed to a seasonal “blip.”
The delinquency rate on credit card accounts at least 30 days past due fell 10 basis points, to 4% from 4.1% in January, while delinquencies on accounts at least 60 days past due fell 9 basis points, to 3.11% from 3.2%.
“Ongoing delinquency improvements are likely to lead to stabilizing, albeit elevated, charge-off levels,” Dean noted.
The delinquency rate on retail card accounts at least 30 days past due held steady in February at 6.02%, while the delinquency rate on accounts at least 60 days past due fell 7 basis points, to 4.13% from 4.2%.
Separately, the American Bankers Association on April 5 said bankcard delinquencies during the fourth quarter of 2010 fell 36 basis points, to 3.28% of all accounts from 3.64% the previous quarter. The results marked the lowest level of consumer bankcard delinquencies in “almost a decade,” and well below the 15-year average of 3.92%, the association said in a press release.
