U.S. consumer credit card delinquency and charge-off rates are finally returning to traditional patterns after almost three years of recession-sparked aberrations, analysts at Moody’s Investors Service Inc. said Dec. 15.
Credit card account charge-offs for most major card issuers through Nov. 30 showed a “modest” increase, which suggests a return to pre-recession patterns, Jeffrey Hibbs, a Moody’s analyst, tells PaymentsSource. Moody’s plans to release the average U.S. credit card charge-off and delinquency data during the week of Dec. 19 after analyzing various issuers’ credit performance reports.
Until 2008, delinquency rates on credit cards typically rose in June, prompting a corresponding increase in charge-off rates in November, Hibbs says.
“Delinquencies typically rise through the summer months for a number of reasons, and a certain percentage of those accounts shift to charge-off status several months later, and that is what we are beginning to see this year,” Hibbs says.
The typical pattern was interrupted by the recession when charge-offs raced to much higher than usual levels with widespread losses in 2009, “blowing through the usual seasonal patterns,” he says.
And when the economy began to recover, the typical pattern was obscured again as charge-offs raced lower, Hibbs says.
“We’re simply seeing a return to normal from pre-recession trends, when an uptick in charge-offs is typically what is expected at this time of year.”
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