Credit Card Defaults and Late Payments Drop with Top 6 Card Companies

Consumers have managed to lower their credit card defaults and late payments with the top six card companies in April, says a new report from The Associated Press. The report revealed that more card users are in control of their spending than they have been in some time.

Card Issuers See Improvement in Customer Payments

According to the report, card issuers saw major drops in defaults (balances considered uncollectible, or charge offs) and late payments in April:

• Capital One Financial Corp.: Cap One reported a drop in defaults to 4.97 percent annualized, which is the biggest drop among the card issuers and is a level not seen since late 2007.
• American Express Co.: Amex celebrated the lowest default rate, which was 3.5 percent. The issuer also had the lowest late payment rate, which was 1.7 percent.
• Citigroup Inc.: Citi had a late payment rate of 3.87 percent, down from 4.21 percent in March.
• Discover Financial Services: Discover saw its late payment rate drop to 2.86 percent in April.
• JPMorgan Chase & Co.: JPMorgan Chase saw its late payments drop 3.15 percent.

Bank of America was the only of the six to report its defaults rose. The bank’s defaults increased to 8.25 percent of balances from 8.18 percent on an annualized basis in April. However, it did have the lowest late payment rate since mid-2006, which was 4.52 percent, down from 4.82 percent in March.

How to Avoid Delinquencies and Defaults

It’s great to see that card customers are doing a better job of managing their credit cards. If you are having problems doing the same, here are some tips on ways to avoid late payments and defaults:

• Set up automatic payments: Sometimes missing a payment comes down to forgetfulness. If you aren’t good with keep up with your due dates, set up automatic payments. Don’t forget to have money in your funding source to make the payment every month.
• Only buy what you can afford: If you must use your credit card to make a purchase, only buy what you can reasonably afford to pay off within the month. This helps you avoid high interest rates and makes sure your balance is low.
• Talk to your card company: If you find that an extenuating circumstance has left you unable to maintain payments on your card, talk to your card issuer to see if there is a way to lower the minimum monthly payment due or avoid a charge off.

Falling behind on your credit card payments can easily dig a while of bad debt and credit score and report issues you don’t want to face. So if you want to fall in line with consumers who are lowering their delinquencies, take steps to make sure you always keep your payments up to date.