Charge offs and delinquencies declined once again in October

The rate at which the nation's largest credit card lenders had to strike accounts so delinquent they can no longer be considered collectable dropped once again, Fitch Ratings revealed, according to Dow Jones Newswires. Charge offs dropped 0.02 percentage points between September and October, to9.2 percent. That figure marked a 19-month low, and was 9 percent lower than the rate observed in October last year. And had it not been for a change in Citi's charge off policy, the rate would have slipped even lower, to 8.93 percent.

However, it was still considerably higher than Fitch's observed historical average for charge offs, which is just 5.93 percent, the report said.

Meanwhile, other forms of delinquency declined across the board as well, the report said. Late-stage delinquencies – those accounts 60 days or more behind, which are viewed as indicators of future charge offs – fell for the 10th month in a row, to a 25-month low of 3.43 percent. Accounts that had been 30 days or more behind dropped 0.01 percentage points between September and October to 4.51 percent.

In addition, Fitch found that consumers paid 0.42 percentage points less than they had in September, falling to 19.23 percent. However, that was still 4 percent higher than it was in October 2009, the report said.

Fitch managing director Michael Dean noted that continued improvements in rates of default and delinquency could continue in the coming months, and that this trend will persist even as the national rate of unemployment remains at or near 10 percent.

In recent months, industry experts have noticed that rates of delinquency and default have decoupled from moving alongside the national unemployment figures, which used to be the norm. However, some believe that this is because those without a job have seen their credit worsen to the point that they are no longer able to qualify for a credit card, effectively locking them out of the lending system entirely.