by Alison Storm | 04/16/10
Credit card companies say more Americans are paying their bills on time. This could be a sign of economic recovery, according to experts. Here are numbers of consumer delinquency rates released by some of the major credit card companies:
- Bank of American Corp says that delinquency rates, or those that are at least 30 days late, fell to 7.07% in March from 7.23% in February.
- Capital One Financial Corp says it's delinquency rates fell to 5.3% in March from 5.51% in February.
- Discover Financial Services saw a slight drop in delinquency rates from 5.39% in March to 5.5% in February.
- American Express delinquency rates dropped from 3.6% in February to 3.3% in March.
- JP Morgan's delinquency rate fell from 4.75% in January to 4.67% in February and again to 4.51% in March.
But delinquency rates are just one factor. Another important number for credit card companies is the charge-off rate. This is when banks charge off credit card balances that are 180 days past their due date. They're assuming that the balance won't be paid. Charge-off rates hit a record level in the third quarter of 2009, reaching 10.1%. Before the recession started, charge-off rates were around 4%. In the fall of 2009, banks wrote off more than $83 billion in credit card debt, a record high. "Given that we were expecting charge-offs at the high-end of the range, these results are a positive," Richard Shane, an analyst at Jefferies & Co, told ABC News. Here's a look at how charge-off rates are falling:
- Bank of America's charge-off rates fell to 12.54% in March from 13.51% in February.
- Discover reported 8.51% charge-off rates in March from 9.11% in February.
- American Express saw an increase in charge-off rates from 7.4% in February to 7.5% in March.
- Capital One Financial saw the largest increase, going from 10.19% in February to 10.87% in March.
- JPMorgan experienced increased charge-off rates, going from 9.21% in February to 9.51% in March.
Experts told ABC News, this data isn't enough to determine whether the recession is over. "We're at that inflection point where credit losses have either peaked or start peaking, so they should start to trend down, but the question is how quickly they come down. The jury's still out," said Michael Taiano, analyst at Sandler O'Neill. Another positive sign was a jump in retail sales for March. Many businesses increased inventories to rates not seen since July of 2008 which was a sign that demand was higher.