Credit Card Charge offs increased in January 2010
Post date: Feb 25, 2010 6:42:25 PM
Wednesday, February 24, 2010
By William Davis
Being late on payments or defaulting on a credit card account can lead to a negative effect on a person's credit score, and a recent report showed more people may be having problems with debt.
According to Moody's Investors Service, credit card charge offs increased to 11.15 percent in January, which is a rise of 0.83 percentage points compared to December. Charge offs are credit card debts that companies no longer expect to be repaid.
Though charge offs were up, the number of early-stage delinquencies did show improvement. Accounts that are more than 30 days late dropped to 5.96 percent. This is the first time early-stage delinquencies were below 6 percent since September.
"The improvement in the early-stage delinquency rate was contrary to seasonal patterns that typically lean toward rising early stage delinquencies this time of year," said William Black, senior vice president with the company.
Experts note that a decline in early-stage delinquencies could lead to a lower number of charge offs for credit card companies. If delinquencies and charge offs decline, lenders may be more inclined to make credit card offers to consumers as the credit crunch eases.