In conjunction with U.S. credit card delinquencies plummeting to a near six-year low- with 60+ day delinquencies dropping for the 19th straight month by another 31 basis points (bps) to settle at 2.15%- total outstanding revolving credit dropped from $795.9 billion to total $792.5 billion in July for the first drop in 2 months. This compares to the June figure of $795.9 billion and is consistent with trends over the past 2 and half years showing revolving consumer credit plummeted from its peak of $973.6 billion in August 2008 by a staggering $179.6 billion, only lurching upwards otherwise in December of 2010, in March of 2011. The July figure is also down 5.2% since the year ago figure of $818.0 billion.
Meanwhile, the delinquency index is now 52% below peak levels of 4.50%, reached 18 months ago, and early stage delinquency also declined 32 bps to 3.02% while credit card defaults were up eight bps from July to sit at 6.41%, ending a four-month plummet, while current chargeoff levels are 35% lower since the year ago period and nearing the 6% historical average. Meanwhile, according to Fitch Ratings, chargeoffs improved for the third consecutive month, while breaking below the 9% mark for the first time in nearly three years, having declined 61 bps from the previous month to 8.84% and are 25% lower year over year. Similar to the prime index, 60+ day delinquencies hit its own six month streak as cardholders continue to make more on time payments. Late stage balances held steady and strengthened another three bps to 3.25%. Both charegoffs and credit outstanding dropped significantly throughout the past year. This just goes to show ya with less credit circulating comes less default risk for the creditors (Cardflash Library, 2011-09-12, 2011-09-13).
