Payment rates on credit cards and loans continue to go up

Despite ongoing economic troubles related to the recession and shaky employment figures released this week, less people are making late loan and credit card payments and less people are defaulting on their cards. That's according to the Associated Press, which reported on loaner's statements from July 2010.

The AP reported that over the past several months many major credit issuers saw their on-time payments increase. At the same time, charge-off rates have decreased. Charge-offs are the point at which credit issuers assume they will not recover a debtor's loan. Most companies assume a charge-off when a debtor fails to make a payment for 180 days, about half a year.

Even though the figures are improving they continue to remain much higher than before the recession. The AP stated that in the first three months of 2010, the industry charged off nearly 10 percent of consumers' balances. That compares to a 3.8 percent average charge off rate in the second quarter of 2007, before the economy began to slump.

Late payments for the credit issuers continued to drop. For Discover and Chase the late payment rate dropped for the seventh consecutive month, the AP reported. At Chase, delinquent loans at least 30 days past due in July fell slightly to 4.25 percent from 4.3 percent the previous month. While at Discover, the rate of accounts delinquent for 30 or more days dropped from 4.8 percent in June to 4.7 percent in July.

Fitch Ratings analyst Mike Dean told the AP the figures show continued improvement in Americans' ability to pay down their credit cards, despite the weak economy.

-Chris Meehan