Five of the six largest U.S. issuers of credit cards reported a drop last month in charge-offs -- industry jargon for the percentage of credit-card balances deemed uncollectable. The drop suggests consumers may be making headway in their efforts to pay off their debts, according to the Associated Press, citing Securites and Exchange Commission filings by the financial institutions today.

American Express Co. (AXP), Bank of America Corp. (BAC), Citigroup Inc. (C), Discover Financial Services (DFS) and JPMorgan Chase & Co. (JPM) each said September charge-offs were the lowest of the year. Only Capital One Financial Corp. (COF) reported a higher level of defaults.

Most of the banks also reported that the percentage of payments that were at least 30 days late fell to the lowest levels of the year in September, the AP said.

The drop in charge-offs and delinquencies indicates consumers have started to cut their debt levels. Record consumer debt helped lead to the most recent financial meltdown, while analysts have said the hangover from those debts has slowed the economic recovery because consumers are redirecting excess cash to pay off debt instead of buying goods.

The numbers also imply a continuation of credit-card payment improvements from the second quarter. The American Bankers Association (ABA) reported earlier this month that bank-card delinquencies fell 0.26 percentage points, to 3.62% -- the lowest level since the first quarter of 2001 and less than the 15-year average of 3.93%.


Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Economics 101

Intro to economics. But fun.

View Course »

Add a Comment

*0 / 3000 Character Maximum

3 Comments

Filter by:
sfamilyent

I'm not in full agreement with the conclusions... I think that we're seeing a decline in credit card defaults because the most vulnerable consumers have already been removed from the credit rolls, and those that remain were already using credit responsibly. I'd like to see the history of the total number of active accounts and the defaults, to see if my theory is correct...

October 16 2010 at 7:21 AM Report abuse rate up rate down Reply
mlrinc10

Michael you are awesome........if only you were the same Michael Sanders I know from OKC, OK.......anyway......my main bank that I keep tens of thousands of dollars balance wise in my business account.....is NOW hounding me TO DEATH for who knows what .....after I used a cc promotion.....and I'm REALLY good on workn promotions for filth since I can afford them and ALWAYS get pmts in on time...... it was a great rate until balance payoff which I used for a partial boat loan..... which was 2% pmt before the great recession.....$350/month.....THEN.....all of the sudden.......5% of pmt....because because because....so....guess what....paid all of cc's off and now this dumbass is calling me from chase trying to sell me or get business from me...... GET REAL! my pmt went from 350 to 875 and they were going to sell me down the river if I was a NORMAL US consumer......GET REAL! again.....I freaking bailed them out......and now they're kissing my ass and harrassing me for business! GET REAL!

October 16 2010 at 3:53 AM Report abuse rate up rate down Reply
MSmailbox

I actually got into trouble (verbal warning) for paying off my credit card, 6 times in one month. My money-market account only allows for (6) transactions (balance transfers + checks) in a single month. Nevertheless, it pays to Discover ("the card that pays you back")! I went to Red Lobster, last night, coutesy of Discover Card. It had been ages since I'd been there and it was mar-vel-ous! They didn't have crab alfredo, so I went with shrimp... Nope, I'm still alive, contrary to press reports of people going beserk and having hallucinations. I never even had that happen, way back when I toked, so perhaps I'm immune. Maybe, if you don't believe all the hype, God takes good care of you.

October 15 2010 at 8:47 PM Report abuse -2 rate up rate down Reply