Just days after a new report detailed that significantly late credit card payments were on the decline again in the second quarter, many major lenders said that trend continued one month later.
Most of the nation's top credit card lenders said they observed improvements in delinquency and default rates in the month of July, though it was perhaps more of a mixed bag than in the past, according to a report from Dow Jones Newswires. However, those who saw these rates worsen did so very slightly, and one lender saw instances of both hold steady.
Discover Financial Services and Capital One both reported fewer instances of delinquency in July, the report said. For the former, its rate of accounts that were 30 days or more behind on payments slipped to 1.83 percent from 1.88 percent, while the latter saw it fall to 3.09 percent from 3.16 percent. However, Capital One also noted that it recently acquired a new portfolio which could drive its overall late payments upwards in the coming months.
Meanwhile, American Express reported that it saw both delinquency and default stay the same in July, the report said. Early-stage late payments came in at 1.2 percent for the second consecutive month while its charge off rate remained at 2 percent.
Bank of America, though, said that its rate of defaults - those accounts so far behind on payments that the balances on them must be declared uncollectable - ticked upwards, but that it only did so very slightly, rising to 5.05 percent from 5.04 percent in June, the report said. However, it also saw its early-stage delinquency, which itself is an indicator of future charge offs, fall to 3.17 percent from 3.23 percent.
While some experts have noted that broadening lending standards will likely lead nearly all lenders to see increases in their delinquency and default rates, some don't necessarily believe this will take place, the report said. Ken Chenault, the chairman and chief executive officer for American Express, recently told investors that consumers are unlikely to start taking on debt at any point in the near future. This may give lenders even more wiggle room to start taking on new customers with lower credit ratings.
"Credit card losses are approaching historical lows despite high unemployment and weak income growth," Moody's said in a report. "This suggests there is considerable room for easing standards and incentives for lenders to maximize their profits."
Many experts believe that these continual declines in both rates cannot last forever. It's believed that at some point, they must naturally progress upwards, even if it is just to all-time historical averages. However, some say that the recent economic downturn fundamentally changed consumers' habits when it comes to credit card use and bill payment, and as such, it might not be as large a leap as many might suspect.