Credit Card Charge-Off Data Improving
Date: 7/28/2010
Consumers appear to be getting back on track with their personal finances judging from recent credit card charge-off data.

Charge-offs are debts that credit card companies have essentially given up on trying to collect payment for. Consumers who hold such debts are still legally liable for them and will typically experience damage to their credit scores as well as calls from collection agencies.

According to Moody's Investor Service, the charge-off rate stood at 10.28 percent in June, marking the third consecutive monthly decline. The current data reflected a drop of 43 basis points compared to May.

"Our base-case expectation is that the unemployment rate will plateau during the second half of the year at 10 percent. This forecast, combined with the steady improvement in the delinquency rate throughout the spring, leads us to believe that charge-offs have peaked and will gradually decline in the final two quarters of the year," said Moody's analyst Jeffrey Hibbs.

Moody's also noted that the latest data marks the first time since December 2006 where credit card performance improved on a year-over-year basis. In June 2009, the charge-off rate was a slightly higher 10.76 percent.