Though defaults increase, delinquencies on credit card debt decline in January

February 24th, 2010 | by admin |

Difficulties with being able to pay off credit card debt continue to be an issue with some consumers, according to a recent report from Moody’s Investors Services.

The firm noted that the number of defaulted credit card accounts increased to 11.15 percent during January, which marks a percentage point climb of 0.83. Given forecasts for unemployment, Moody’s said it expects the charge-off rate to hit a high of 12 percent in the coming months.

Though the number of charge offs did increase during the first month of the year, the report from Moody’s did have a positive note about early-stage delinquencies, which are often a harbinger of later defaults.

According to the report, the number of credit card debt accounts that were more than 30 days late in payment dropped to 5.96 percent, which is the first time this metric has been below 6 percent since last September.

Moody’s senior vice president William Black said the drop in delinquencies in January bucks a seasonal trend that normally sees early-stage delinquencies increase at the beginning of the year.

“In fact, this month marks the first January since 2004 where early-stage delinquencies declined from the prior December, an improvement that is an encouraging indication of stability or improvement in charge-off rates by mid-year,” Black said.

The report from Moody’s did show that the payment rate on credit cards declined, falling to 17.53 percent. This metric gauges the average amount of principal that cardholders pay off on their accounts every month.

Though some consumers are having a hard time paying off their credit card debt, a recent report from the Federal Reserve Board shows that revolving consumer credit – mostly made up by credit card debt, declined by 9.5 percent in 2009.

Though this means that consumers are trying to pay off their credit card debt, it could also be an indication that companies are encountering more charge offs.

More Credit & Debt Articles | News Home | Discuss in our Forum

Delinquencies on credit card debt took a dip in January.

Obama administration praises credit card reform &nbsp&nbsp02.22.10
Report: Credit card delinquencies increase in fourth quarter &nbsp&nbsp02.22.10
CNNMoney rates Credit.com as one of the best websites for personal finance questions &nbsp&nbsp02.20.10
Late payments on home loans see record level in 2009 fourth quarter &nbsp&nbsp02.18.10
Federal Reserve minutes show confidence in economic growth &nbsp&nbsp02.18.10
Long-term fixed mortgages dominate refinances for Freddie Mac in fourth quarter &nbsp&nbsp02.17.10
Credit card law may create competition, reward rich &nbsp&nbsp02.17.10
Financial security decreases in the New Year &nbsp&nbsp02.16.10

Insight and Guidance for Smart Choices^®

Cards by Credit Score
— Excellent Credit
— Good Credit
— Fair Credit
— Bad Credit
— No Credit
Credit Card Rewards
— Airline Miles
— Cash Cards
— Reward Points
— Gas Cards
Low APR
Balance Transfer
PrePaid Cards
Secured Cards
Business Cards
Student Cards

Free Trial Credit Reports
3 Credit Scores & 3 Reports
3 in 1 Credit Report
FICO Scores
Credit Monitoring
Identity Theft
Credit Report Comparison Chart

Personal Loans
Home Loans
Student Loans
Loan Status
Loan Comparison Chart

Free Debt Consultation
Debt Consolidation Loan
Debt Help Product Comparison

Business & Finance World News