Is the economy of the world on its path to recovery? Are we seeing the end of tough financial times? If we were to consider the credit card delinquencies as an option to measure the same, then, it is definitely a 'yes'. With an increasing number of customers willing to repay their credit card dues on time consistently, it is a sure sign that we are on the path to better financial times.
Drop in delinquency rates
The data presented for the most recent month by most companies that issue credit cards showed a significant decrease in the number of people who defaulted on their payments. The delinquency rates are the payments that have come in 30 days past the due date and they have proven to be one of the reliable measures for the possible financial loss in the future.
Capital One Financial Corporation, Discover Financial Services, JP Morgan Chase and Bank of America reported a fall in the delinquency rates for March 2010. Bank of America that showed a delinquency rate of 7.23% in February fell to 7% in March.
The delinquency rates that for Capital One Financial Corporation and Discover Financial Services, which stood at 5.5% in February, fell to 5.3% in March. Another credit card company that deals with high profile people, American Express, also saw an improvement in the delinquency rates. The rates for missed payments that stood at 3.6% in the month of February fell to 3.3% in the month of March.
Stephen Brobeck, Consumer Federation of America's executive director, said "There are strong indications that not only the economy but the financial condition of individual households is starting to improve".
Optimism in the air
The sentiments expressed by Mr Brobeck were echoed by Jaime Dimon, Chief Executive of JP Morgan Chase and Ben Bernanke, the Fed Chairman in statements issued by them individually.
It has been noticed in the past that the delinquency rates fall significantly in spring since consumers use the tax refunds they get in hand to repay their existing debts. However, the increased consumer spending noticed during this period this year further substantiates the fact that we are moving towards a better economy.
While the news seems to be positive from most financial institutions, there are a few that still reported some setbacks. The charge offs on credit cards which is nothing but the balance not paid over the last 180 days are had to be written off still remained high for a few lenders.