The average U.S. consumer credit card chargeoff rate declined again in October as more consumers met their monthly payment due dates and the delinquency rate on late payments held steady, according to the latest data from Moody's Investors Service.
The bank card chargeoff rate was 5.21% in October, down six basis points from 5.27% in September and down 358 basis points from 8.79% in October 2010, Moody's said in a report last month.
"We expect this trend of falling chargeoffs, which has been in place for nearly two full years, to continue into the coming year, eventually moving the chargeoff rate to below 4% by the end of 2012," Moody's said in the report.
The average delinquency rate in October on accounts at least 30 days past due held steady for the second consecutive month at 3.04%, an all-time low, according to Moody's.
The trends suggest credit card issuers will continue to report relatively lower monthly credit card losses, Moody's said.
But with the flattening out of delinquency rates after nearly 18 months of declines, "the pace of further improvement is likely to be muted," Moody's said.
Early stage delinquency rates on accounts 30 days past due at the nation's six largest issuers ticked up in September, which Moody's said could suggest an interruption in the steady march of improvements. But as long as the average delinquency rate on accounts 30 to 90 days past due continues to show flat-to-modest improvement, Moody's says its forecast of declining credit card chargeoff rates is likely to hold.
The average credit card chargeoff rate peaked in March 2010 at 11.21%, and the average delinquency rate peaked one year earlier, in March 2009, at 6.4%, Moody's data shows.
