Credit Card Defaults and Late Payments Decline Again

Photo (cc) by thisisbossi

The following post comes from partner site LowCards.com.

Credit card late payments and defaults continue to drop and return to pre-recession levels, according to the latest regulatory filings. This is good news for banks that are looking for ways to improve credit card revenue.

Late payments dropped in May for all six major issuers, and five of the six issuers showed a decline in charge-off rates. Issuers usually write off balances as uncollectible after they are six months past due.

In 2009 and 2010, the top six banks that issue credit cards lost $74.5 billion to credit card defaults according to Moody’s. During this time, banks also lost billions of dollars in fees and interest payments due to the new credit card regulations.

“Credit cardholders and issuers have both made changes that brought an excessive system of credit card borrowing and lending back under control,” says Bill Hardekopf, CEO of LowCards.com. “So many of the borrowers who could not pay off their debt defaulted during the last two years while others have diligently paid down their balances to avoid the high interest rate penalties. Credit card issuers closed risky accounts, cut credit limits on millions of accounts, and tightened lending standards to cut their risk of defaults and late payments. The steadily dropping defaults and late payments are signs of a healthier lending environment.”

Charge-offs and late payments peaked in the summer of 2010 and have dropped steadily since then.

  • Chase was the only major issuer to post an increase in charge-offs in May. The rate increased from 5.6 percent in April to 5.67 percent in May. Late payments dropped to 2.66 percent of balances in May, down from 2.86 percent in April.
  • Discover wrote off 4.82 percent of balances on an annualized basis, down from 5.02 percent in April. The was the lowest rate in over three years. Late payments fell to 2.88 percent of balances in May, down from 3.15 percent in April.
  • Bank of America wrote off credit card balances at an annualized rate of 8.03 percent in May, down from 8.25 percent in April. The late-payment rate was 4.28 percent annualized in May, down from 4.52 percent in April.
  • American Express charge-offs dropped to 3.2 percent of balances on an annualized basis, down from 3.5 percent in April. Late payments dropped to 1.6 percent of balances in May, down from 1.7 percent in April.
  • Citi’s charge-off rate dropped to 7.81 percent in May, down from 7.85 percent in April. Late payments dropped to 3.66 percent in May, down from 3.87 in April.
  • Capital One defaults fell to 4.84 percent in May from 4.97 percent the previous month. Delinquencies in May were 3.32 percent versus 3.41 percent in April.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
This Is the Top Home Insurer — for 18 Years Running
This Is the Top Home Insurer — for 18 Years Running

Homeowners are increasingly unhappy with their insurance companies, but one stands out for the better.

How to Stop Living Paycheck to Paycheck in 8 Steps
How to Stop Living Paycheck to Paycheck in 8 Steps

Does it feel like your paycheck is gone the moment you get it? You can break that vicious cycle.

The 2 Biggest Retirement Fears of Baby Boomers
The 2 Biggest Retirement Fears of Baby Boomers

Boomers have a lot of worries as they age, but two stand out.

10 Places Where Social Security Offers the Best Standard of Living
10 Places Where Social Security Offers the Best Standard of Living

These U.S. counties offer retirees a chance to stretch their benefit checks while enjoying their golden years.

Stop Overpaying for These 10 Common Purchases
Stop Overpaying for These 10 Common Purchases

The best price for many of these items is “free.”

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

Why Cloth Masks May Increase Your Coronavirus Risk
Why Cloth Masks May Increase Your Coronavirus Risk

A new study finds that wearing a cloth mask can backfire if you don’t clean it properly.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

This Is the Cheapest Place to Buy a Used Car
This Is the Cheapest Place to Buy a Used Car

Looking for a good deal on a set of wheels? This should be your first stop.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.