Credit card late payments slipped in May to 4.18 percent from 4.27 percent in April, marking the fourth straight month of fewer consumers making late payments of 60 days or more, according to the latest Fitch Ratings index.
So-called early stage delinquencies – those late 30 days or more – slid to 5.53 percent from 5.74 percent in April.
But credit card issuers overall are still battling higher charge-offs – those loans deemed uncollectible after becoming 180 days late. Charge-offs jumped to 11.1 percent, from 10.93 percent in April.
Delinquencies trending downward is a positive sign that charge-offs may be leveling off. But much depends on the economic recovery and the labor market, Fitch said.
Yesterday’s labor report showing much slower private-sector job creation is concerning.
“Charge-off rates have been holding steady at over 10 percent for a full year now so the pressure on U.S. consumer credit quality is still clearly evident,’ said Managing Director Michael Dean. ‘On the positive side, cardholder defaults have plateau-ed so some seasonal improvement should emerge as we head through the summer months.”
Credit card charge-offs in the U.S. have remained high this year, with the index averaging 11.17 percent through April, compared to 8.59 percent during the same period last year
Fitch’s Prime Credit Card index tracks more than $229 billion of prime credit card asset-backed securities – backed by approximately $308 billion of principal receivables. The index is primarily composed of general purpose portfolios from Bank of America, Citibank, Chase, Capital One, Discover, HSBC and other issuers.
