For some time, experts have speculated that the time at which consumers must logically start making more late payments into their various lines of credit must come in the near future, but once again in May, borrowers showed that they were still eager to pay their bills on time and in full.
Instances of delinquency shrank once again in May for all six of the nation's largest credit card lenders, and defaults declined for all but one despite some economic indicators that they might move in the other direction, according to a report from the Wall Street Journal. It was believed slower job creation and other factors could slow consumers' repayment rates, but this wasn't the case.
Capital One Financial, Discover Financial Services, Bank of America, JPMorgan Chase, Citigroup and American Express said they saw fewer delinquencies between April and May, the report said. Delinquencies are typically categorized as accounts that are 30 days or more behind on payments but still considered collectible by lenders. At the same time, defaults, which are accounts 90 days or more behind on payments upon which lenders no longer believe they can collect, increased for only one of those lenders.
Discover's charge offs made up 2.65 percent of all accounts in May, up from 2.6 percent in April, the report said. However, experts note that this increase was relatively small, and less than is normally seen as a result of seasonal fluctuations. Further, the current rate for charge offs at the company is well below all-time averages and still close to the record lows observed in previous months.
But lenders may be hedging their bets
Even as consumers continued to improve their credit card payment rates in general, the economic indicators that might lead to fewer current accounts in the future may have deterred lenders somewhat, the report said. Data from tracking firm Mintel Comperemedia shows that the rate at which lenders sent offers for new accounts to consumers dipped in April to 260.6 million, both from March's total of 269.5 million and a year-over-year decline from 389.6 million, and this was largely due to economic uncertainties that linger despite continual improvements in credit quality.
Experts have projected that there must be a logical point at which charge offs and delinquencies bottom out and begin growing again as lenders expand borrowing qualifications, but consumers have apparently not yet reached it. Further, any additional reining in of offers will likely only delay that point, which may not be a bad thing for lenders.
Making on-time payments is crucial to maintaining a healthy borrowing history, but so too is consumers' making sure to check their credit reports. By doing so, they may be able to identify potentially unfair markings that can have a negative impact on their ratings. Working with a credit repair firm can help to reduce these concerns.