Reports just out from five of the six top credit card issuers showed that default rates on accounts fell in June. Of the banks reporting, Bank of America showed the biggest reduction in default rates with Chase Bank, Discover reporting very noticeable declines. Just recently Discover said their default rate was at the lowest ever in their history.
According to public date, the charge-off rate on credit cards among the largest banks has fallen 35 percent since the peak in early 2010 at 10.88 percent.
Banks are working hard to further reduce exposure and reduce default rates. That’s not good news for the debt relief space which will see less demand for services as consumers default less.
Eventually as banks see less risk and exposure and more confidence about the economy they will begin to lend again.
Recent debt relief trends have shown a slight uptick in consumer spending. I covered what I believe that really means, in Consumers Loading Up on Credit in May.
Citigroup, JPMorgan Chase, Capital One and Discover said they have pulled money out of set asides to cover projected future defaults since they see that threat continuing to reduce.
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