A continued decline in credit card charge-offs is a strong indicator that the economy has turned the corner regarding the volume of loans that result in a default. Meanwhile, according to a report released by Moodyâs Investors Service in late January, the average charge-off rate on U.S. consumer credit cards declined in December, the fourth consecutive month for such an occurrence. Moreover, analysts believe the trend will continue, meaning the average charge-off rate will decline even more through the first six months of 2011.
The Moody report also revealed that early stage delinquencies, meaning those at least 30 days past due, fell 44 basis points to 1.05 percent from 1.49 percent. That figure marks its lowest level since 2000, when Moodyâs began tracking average credit card delinquency rates.
Should the level of charge-offs continue to decline, as expected, Moodyâs said that overall credit card receivables balances will rise during the second half of the year, following two years of declines. Should that occur, Moodyâs predicts the average credit card charge-off rate will maintain its slow but steady slide.
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Tags: ECONOMY