Story out in Collections & Credit Risk is reporting the average consumer credit card default rate has continued it;s decline for most large issuers in May, according to Moody’s Investors Services.
All of the top six credit card issuers except JPMorgan Chase & Co. on June 15 reported fewer accounts deemed uncollectible during May, and Chase’s increase was so slight it is insignificant to the broader trend of credit improvement, Jeffrey Hibbs, a Moody’s analyst, told PaymentsSource in an interview.
“The average credit card charge-off rate will fall below 7% for this reporting period if not the next as we continue to see the results of issuers removing weaker borrowers from their portfolios following the recession,” Hibbs said.
The average charge-off rate for consumer cards in April was 7.16%, down 19 basis points from 7.35% in March.
If present trends continue, charge-off rates will fall to 4% by the end of 2012, well below historic rates of about 6%, Moody’s predicted.
Charge-off rates that low spell trouble for debt relief companies since it is an indicator about demand.
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