In the last few months, consumers have been quite conscientious about trying to make sure their credit card bills were paid on time and in full, but that habit lapsed somewhat in April, leading to an increase in defaulted accounts.
Credit card charge offs, accounts that are considered by lenders to be so far behind on payments that they are stricken from the institution's records, increased somewhat during the month of April, according to a report from Dow Jones Newswires. The data, collected by Moody's Analytics, shows that charge offs rose to 5.21 percent of all outstanding balances, up from 4.92 percent in March.
Moody's found that the increase was driven largely by a significant jump in write downs suffered by Citibank, but that trend should reverse itself somewhat over the remaining course of the year, the report said. In addition, credit quality throughout the credit card lending industry remains quite high despite the increase in charge offs, as payment and delinquency rates continued to hover at or near all-time records.
In furtherance of the latter point, delinquencies on credit cards, defined as accounts that are 30 days or more behind on payments, slumped once again in April even as charge offs increased, the report said. During the month, the rate of new late payments fell to 2.59 percent from 2.73 percent in March, which marked the third straight month that early-stage delinquencies reached an all-time low. Meanwhile, the payment rate on consumer credit cards, which is based on consumers' abilities to pay off their balances, slipped to 21.49 percent of all accounts, down from March's total of 22.11 percent.
Improving rates of early-stage delinquency is often seen as an indicator of future fluctuations in the charge off rate, implying that consumer credit will continue to improve over the next few months. Consumers who have seen their credit standings improving through healthy repayment habits may be able to obtain more beneficial cards as a result, but should first check their credit reports to make sure their standings are as they should be. Sometimes, unfair markings can lower consumers' credit ratings, denying them access to cards that ought to be available to them. Working with a credit repair company can help to clear up these issues.