There has been a steady decline in credit card write-offs now and this has brought in some cheer for card issuers. Issuers have seen a drop in levels to 6.96% during the first quarter of this year when compared to 10.97% during its peak in the second quarter of last year, as per data from the Fed Reserve.
Four out of five credit card issuers have reported a decline in delinquencies. This trend has been continuing for quite some time now. This is also partly due to the fact that banks have written off balances on some of its customers who are expected to default. These individuals are now having a hard time to obtain fresh credit cards.
Card companies normally write off balances on cards only after a period of 180 days as they assume that these are uncollectible. Some companies such as Capital One wait for a period of six months before the write off.
According to the data available, card users have been making a conscious effort to pay off their balances in order to protect them adequately in the event of any economic downturn. There was a decline in the outstanding on revolving balances during the month of April. This mostly comprised of credit card expenses and it fell to around $790.11 billion which is a 5% decrease from $831.11 billion in the previous years. That figure was over $973.64 billion during August 2008.
The write-off rates are likely to decline even further as long as banks keep tightening their requirements for credit card approval.