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Consumers' credit card health has improved dramatically

These charts include data for Q2/11 that was released today. What they show is a dramatic improvement in consumers' credit card health. Delinquency rates have plunged to close to the lowest levels seen in the past 20 years, and that presages further declines in credit card chargeoff rates. (Since delinquency rates are still declining, we are likely to see chargeoff rates decline in the future, since borrowers that eventually go bust must first become delinquent.) From this we can infer that not only have consumers undergone some significant deleveraging, but that incomes and debt service have now come back into some semblance of balance. Moreover, banks can look forward to lower credit card losses.

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