Most lenders see delinquency and default drop

The rates of delinquent and defaulted credit card accounts for the nation's six largest lenders have improved considerably over the past several months, meaning far bigger profits for the financial institutions, and that trend continued through the month of June.

Five of the nation's top six credit card lenders have filed their monthly reports on their company's credit card business, and all saw improvements in the rates at which they had to write off seriously delinquent accounts as being uncollectable, according to a report from the Associated Press. Similarly, four of the five saw delinquent accounts dip as well. Only Citibank has yet to make its monthly regulatory filing with the federal government.

Only Capital One Financial saw delinquency – accounts 30 days or more past due – increase in June, the report said. This continued a trend that has seen late payments fall to lows not seen since before the start of the national recession for nearly all lenders.

Meanwhile, charge offs – those accounts 90 days or more behind on payments that lenders feel they will never recover – slipped across the board, with Bank of America seeing the largest declines, the report said. JPMorgan Chase and Discover Financial Services also saw large improvements in defaulted accounts.

Significant declines in industry-wide charge off rates are good news for lenders, who previously had to set aside tens of millions of dollars per month to offset the losses from those defaulted accounts, the report said. But because these rates have slipped repeatedly since late last year, almost all of the country's top six lenders are now enjoying appreciably higher profits from their credit card businesses.

Further, consumers are now returning to more frequent use of their credit card accounts now that the economy has begun to improve again, the report said. During the recession, not only were charge off rates at or near all-time highs, but consumers wary of digging themselves into deeper debt largely swore off credit card use.

Some experts warn that continued improvements in defaulted credit card accounts are likely to continue, because most lenders have already forced most riskier borrowers out of the lending system as a result of past defaults. Now, those consumers are likely to find it difficult or even impossible to find new lines of credit.