Credit Card Losses Decline In July, Reversing Almost Two Years Of Increases
Written by Ken Gaebler
Credit card losses decreased in July, following two years of almost continual increases, Standard & Poor's reported.
Following recent reports of slowed job losses and improved business productivity, the latest positive economic news for small business owners comes from the Standard & Poor's announcement this week that U.S. bankcard losses fell in July after two years of almost continual increases.
The S&P Credit Card Quality Index (CCQI) dropped 60 basis points from the historical high of 10.4 percent in June, landing at 9.8 percent in July.
The CCQI measures credit card losses among $491.1 billion of receivables held in trusts of rated U.S. credit card-backed securities, which represents approximately 53 percent of the total U.S. consumer credit card debt balance.
Although the drop in the index is encouraging, it does not necessarily indicate that the trend will continue, S&P noted. This is because credit card losses are usually linked to unemployment rates, which analysts believe will continue to rise.
S&P credit analyst Kelly Luo estimated that CCQI losses will range from an average of 10.5 percent to 13 percent this year, and remain in that range for the next one to two years.
The Federal Reserve also announced this week that consumer credit decreased at an annual rate of 10.5 percent in July, while revolving credit fell at an annual rate of 8 percent.
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