All the latest numbers make it look like a success story. Credit card debt and delinquencies have declined in recent months, and experts hail these numbers as a sign that Americans are pulling themselves out of financial trouble.
But a new report in the Wall Street Journal says a deeper look tells the opposite story. The real reason for these sharp declines over the past few months, despite rates of joblessness remaining rather high, is that credit card companies are simply writing off long-delinquent debt as money they will never collect.
The evidence, the Journal says, is found in the quarterly numbers from the Federal Reserve Board and the Federal Deposit Insurance Corporation, which show that despite $19.5 billion in debt reduced in the first three months of the year, $18.7 billion of that – almost 96 percent – was actually written off as being irretrievable.
A Forbes report on the drop in debt and delinquency said that unemployment and delinquency figures are usually closely connected, but that trend didn’t hold last month as delinquencies dropped while joblessness held steady.