Good News: Bank Card Defaults Are Down

The bank card default rate experienced its first drop in nine months with four basis points to 3.49%, according to a new report from S&P Dow Jones Indices and Experian. That’s good news for card issuers, including credit unions.

These indices represent a comprehensive measure of changes in consumer credit defaults and show that the composite rate dropped four basis points from last month to 0.82%.

Auto loan defaults decreased three basis points from the previous month to 0.82%, and the first mortgage default rate dropped four basis points from May to 0.60%.

Three of the five major cities saw their default rates decrease in the month of June. New York had the largest decrease, down 13 basis points from May to 0.88%.

Miami reported 1.17% for June, dropping 12 basis points from the previous month. Chicago came in at 0.91%, down six basis points from May. Dallas and Los Angeles both remain unchanged from last month at 0.67%, and 0.66% respectively.

Although the National bank card default rate experienced its first drop in nine months, it is still high.

When comparing the bank card default rate among the four census divisions, the default rate in the South is considerably higher than the other three census divisions.

The East South Central Census Region – comprised of Kentucky, Tennessee, Alabama, and Mississippi – has the highest bank card default rate. As per Bureau of Labor Statistics, these states have some of the lowest median household income.

Still, bank card defaults had been showing an alarming rise. Let’s hope this new downward trend continues.

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