Banks report decrease in late payments and credit defaults

Good news for those with bad credit: consumers are becoming more in control of their money, as credit card defaults and late payments were at a record low in April, reports The Associated Press.

This signals an improving economy, which could potentially benefit consumers by creating more jobs and allowing them to make ends meet, thus decreasing the chance of being unable to pay off a car loan or other type of credit.

Capital One Financial Corporation reports its largest drop in defaults and late payments since 2007, at 4.97 percent, while American Express reported a 3.5 percent reduction, according to the news source.

“I’m actually a little surprised at how fast they’re coming down,” Mike Dean, managing director at Fitch ratings, told the news source.

While this news may be well and good for the consumer, charge-offs – overdue balances that the banks deem uncollectible due to lack of payment – are still on the rise, with banks eating the cost. Bank of America’s charge-off rates reportedly increased by 8.25 percent in the last month from 8.18 percent.