While many consumers have made conscientious efforts to reduce debt in the wake of the national recession, it was tighter lending restrictions that caused instances of defaulted accounts to fall so precipitously and steadily over the last several months.
More stringent borrowing standards set by the nation's six largest credit card lenders have caused credit card defaults to slip significantly over the last year, according to a report from the Associated Press. This trend is expected to continue for the rest of the year, as charge off rates [may] slip below 4 percent for the first time in 20 years.
In 2009 and 2010, the six credit card lenders in question – American Express, bank of America, Capital One, Citi, Discover and JPMorgan Chase – lost a combined $74.5 billion to defaulted accounts, the report said. The nationwide charge off rate peaked at 10.9 percent during the second quarter of 2010, but has fallen steadily ever since.
Many consumers suffered credit card delinquency and default during the recession through no fault of their own, as prolonged unemployment weighed heavily on millions of Americans.