More Americans Pay Credit Cards on Time

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NEW YORK (AP) — Major credit card lenders reported Thursday that more Americans are paying their loans on time, a sign that the economic recovery is taking hold.

Consumer delinquency rates measure payments at least 30 days late and are an indicator of future loan losses for banks. Bank of America

Corp. said in a regulatory filing that its customers' rate slid to 7.07% in March from 7.23% in February.

Capital One Financial Corp. reported its rate fell to 5.3% in March from 5.51% the month before, while Discover Financial Services said 5.39% of payments were delinquent, down from 5.5%.

American Express, which generally caters to the more affluent, saw its delinquency rate drop to 3.3% last month from 3.6% in February.

However, the volume of credit card balances that banks charged off remains elevated across the board.

Loans are written off by banks once they're 180 days past due, under the assumption that consumers won't be able to repay the debt. The charge-off rate on credit card loans spiked dramatically industrywide amid the recession, hitting a record 10.1% in the third quarter of last year, according to data from the Federal Reserve. For all of 2009, banks wrote off a record $83.27 billion in credit card debt.

By comparison, the charge-off rate was 4% in the fourth quarter of 2006, a year before the downturn began.

Bank of America said its March charge-off rate eased to 12.54% from 13.51% in February. Discover, meanwhile, charged off $160.1 million in March. That represented 8.51% of its loans, down from 9.11% the previous month.

Write-offs climbed, however, at other lenders. American Express said its charge-off rate rose slightly to 7.5% from 7.4%, while Capital One Financial's losses rose to 10.87%, from 10.19%.

JPMorgan Chase, the first of the big banks to report earnings for the January-March period, on Wednesday reported quarterly profit of $3.3 billion that easily topped expectations. The bank said first-quarter losses in its credit card business dipped to $303 million from $306 million in the 2009 fourth quarter, while the amount it set aside for future credit card losses also dropped to $3.5 billion.

The bank had previously predicted that losses in its credit card business would remain elevated in the first half of 2010.

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