Major financial institutions have reported improvements in credit card defaults and late payment rates, indicating that customer credit card payments may be getting under control.

Three of the top six credit card-issuing banks reported declines in default rates, and four reported drops in delinquencies.? The others reported small upticks in both, but the mixed reports point to a steady decline in defaults and delinquencies overall.

Citigroup reported a drop in delinquencies by 2.8 percentage points ? from 6.06 percent in March 2010 to only 3.26 percent today.? Discover Financial Services reported delinquencies on only 2.48 percent of balances ? its lowest rate since December 2006.? Industry-leader American Express Co. reported a 0.01 percentage point uptick in its delinquency rate to 1.5 percent, but that was still much lower than it reported in early 2007.

American Express also reported the lowest default rate in the business, 2.7 percent, while Discover reported 3.26 percent, and Capitol One Financial Corp. reported 3.96 percent.? All the other major issuers reported higher rates, including Bank of America (5.98 percent), Citibank (5.66 percent) and Chase (4.18 percent) ? but those rates were only half of what they were a year and a half ago.

The results seem to have broken the downward trend, a sign that customers may be returning to more normal seasonal patterns that preceded the 2008 Financial Meltdown.

Sarah Jordan

Sarah Jordan

Sarah Jordan is the VP of Marketing for PaySimple, the leading provider of service commerce solutions for SMBs. At PaySimple, Sarah leads the company’s brand, acquisition, lifecycle, and product marketing strategies, and has been an integral player in growing the company from a fledgling startup to a leading SaaS platform, serving over 15,000 businesses across the country. She loves live music, being outside, great food, and hanging out with her husband, little boy, and dog.

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  • Low as the credit card delinquency rate already is, there is some more room left for improvement, as indicated by the early-stage delinquency rate (30 – 59 days), which continues to fall and is now at 0.75 percent, the lowest rate ever. What’s even more certain is that defaults will keep falling, as the charge-off rate is a trailing indicator for the delinquency one.