As expected performance metrics for U.S. credit card issuers improved in July, however it may only be a seasonal inflexion. The latest figures for credit card-backed securities shows delinquency nudged down eight basis points and charge-offs dropped 24 basis points from June. According to Moody’s “Credit Card Index” for U.S. ABS, the overall delinquency rate declined to 5.73% in July from 5.81% in June and compared to the March peak of 6.40%. It is at the lowest level of 2009.
Charge-offs dropped to 10.52% in July, marking the first month over month improvement in the charge-off rate index since September. The charge-off rate was a record-high 10.76% in June. The Moody’s index also shows payment rates rising sharply for the second consecutive month, reaching 17.43%, its highest point since October 2008. Additionally, the index yield surged ahead to 19.82% in July, a one hundred thirty
basis point improvement over the prior month, and its highest level since December of 2007.
U.S. ABS 2009 CREDIT CARD INDEX
Jan: 5.94% 7.74%
Feb: 6.14% 8.82%
Mar: 6.40% 9.30%
Apr: 6.34% 9.97%
May: 5.97% 10.62%
Jun: 5.81% 10.76%
Jul: 5.73% 10.52%