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Decrease In Charge Offs May Mean Less Debt For Americans

Posted by Bill Crowley on December 6 2010 @ 10:05 am

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Decrease in charge off may lead to increased lending. Many Americans continued to struggle with rising unemployment and reports of foreclosures in October.

Consumers have decreased credit card use in recent months, instead choosing options such as cash, checks and debit cards for payments - techniques that may be finally paying off.

Credit card issuers, including JPMorgan Chase and Capital One Financial, reported writing fewer charge offs - loan delinquencies that are more than 90 days late - as noncollectable in October, Bloomberg reports. Overall, the rate of charge offs fell to 8.79 percent in October, its lowest total in almost two years.

"You can only charge off once,” Capital One chief executive officer Richard D. Fairbank told the news source. "Someone who’s been unemployed for three years, I can pretty much guarantee that long ago they said goodbye to their Capital One credit card."

The recent decrease indicates more cardholders are making timely payments. This is a trend that is likely to increase lender profits and in turn spur additional lending to consumers who experienced charge offs in recent months.

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