U.S. consumer bankcard delinquencies hit a record low in June, while charge-off rates also improved again, according to data Moody's Investors Service released Thursday.
As more consumers kept up with monthly payments, the delinquency rate on accounts 30 to 120 days past due declined in June by 11 basis points, to 3.19%, reaching its lowest level since Moody's began the tracking the data in 1989.
The charge-off rate on outstanding credit card receivables fell to 6.04%, as fewer consumers defaulted on credit card accounts. Bankcard charge-offs reached a peak of 11.08% in February 2010, according to Moody's.
"The combination of falling charge-offs, low delinquency rates and high payment rates, all credit-positive trends, reflects the steadily changing composition of trusts toward higher credit quality obligors, a transition that has unfolded over the past several quarters," Moody's said in a report accompanying the data.
The company previously forecast that bankcard charge-off rates would fall below 4% by the end of next year.
Private-label retail credit card charge-offs are declining at a slower rate than bankcard rates because retail card balances remained more stable during the recession. Consequently, issuers did not tighten underwriting standards as severely as they did for bankcards, Moody's said.
The firm forecasts that retail credit card charge-off rates will improve from a range of about 7.5% to 10% during the first quarter of this year to a range of about 5.5% to 8.5% by the end of 2011.
