Paying off credit card debt stabilizes lending industry

Many credit card companies have seen their businesses become more reliable even after the passage of the Credit Card Accountability, Responsibility and Disclosure Act thanks to more consumers paying off their credit card debt.

Credit card companies, such as Capital One Financial and Discover Financial Services, have seen stabilized earnings and losses in recent months, according to a report from business research firm Stock Call. This is because the companies have tightened restrictions on what kinds of consumers they will allow to compile credit card debt. These new rules allow them to release money that was held in reserve to counterbalance losses from delinquent credit card debt.

The report also said credit card companies have been able to step up lobbying efforts with 25 percent more funding because there is still some uncertainty in the industry regarding possible future changes to federal law.

More consumers have contributed to the stabilization of the industry by reining in their own spending as the economy continues to make slow progress. Controlled spending allows individuals to pay off more credit card debt, and, as a result, lenders are charging off fewer delinquent accounts.