Late payments on credit cards issued by Citibank and payment
cards on the Discover network hit their lowest points since 2008
and 2006 respectively during April 2011.
According to news agency Associated Press, the credit
card division of Citigroup said the number of payment late by 35
days or more fell from 4.21% of balances in March 2011 to 3.87% in
April 2011.
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This fall in delinquency rate almost brings Citi on a par with
rates seen before the global economic crisis hit the financial
services industry – which was 3.84% in May 2008.
The AP also reports Discover’s delinquency rates
dropped to 3.15% on an annualised basis during the month of April
from 3.42% in March 2011 – a figure not seen since well before the
recession.
The news agency claims Discover wrote off $72.36m, or 5.02%, of
balances in April 2011, down from $83.1m, or 5.18% the month
previous. This encouraging drop brings the network ever closer to
equaling its 4.81% charge-off rate seen in February 2008, before
the global economic crisis took hold.
Falls in delinquency and charge-off rates seen by Citigroup and
Discover are part of a wider trend of improved consumer credit
conditions. This is highlighted by credit and information
management company TransUnion’s Credit Risk Index (CRI).
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By GlobalDataTransUnion’s CRI declined for the fifth consecutive quarter,
indicating consumers are increasingly likely to repay their debt
obligations and are managing credit more responsibly. The CRI for
Q1 2011 came in at 123.56, almost 5% lower than the index high of
129.67, seen in Q4 2009, and 1.6% lower when compared to the
quarter previous (125.61). This quarterly decline was the largest
since the third quarter of 2008.
“The broad and steady decline in the CRI, coupled with moderate
increases in the demand for credit over the previous year suggest
that consumers continue to live within their means, tending to
acquire new credit only for larger, specific purchases,” said Chet
Wiermanski, global chief scientist at TransUnion.
“In less than four years, the percentage of consumers with at
least one general purpose bank issued credit card has dropped from
its peak of 75% to just below 66%, a level not seen since early
1998, with all indicators pointing to lower levels to come. The
shift toward more responsible use of credit, coupled with an
anticipated improvement with the economic front, should drive the
CRI lower in the next several quarters.”
The CRI measures changes in credit score distributions relative
to the national distribution and delinquency rates as a whole at
the end of 1998.
