Write-offs on credit card portfolios in the UK
hit their highest level since records began, at £2.1bn ($3.2bn),
according to a Bank of England update.

Write-offs for the three months ended July
2010, which represent loans that credit card issuers consider
unlikely to be paid back, increased 163 percent from the same
period last year. They increased 70.5 percent on the previous
quarter and were the highest since the Bank of England started
publishing information on credit cards write-offs
in 1993.

The increase reflects a global trend that
could suggest fortunes for the payments industry are improving.
Credit card write-offs lag economic conditions by around 90 days,
depending on the methodology used.

Write-offs in the US peaked in the first
quarter of 2010 and have recently started to decline gently. The
most recent data, provided by Standard & Poor’s, shows
write-offs declined from 9.7 percent to 8.7 percent in June. UK
write-offs look likely to peak in the next set of figures to be
released by the Bank of England, in September, before starting to
decline from early 2011.

Other Bank of England statistics showed
overall credit card lending in the country increased by around
£0.2bn, in line with the six-month average. The most recent
evidence in the US is credit card issuers are shrinking their loan
books. According to the Federal Reserve, US consumers have reduced
credit card spending for 21 consecutive months.