Bankers and industry analysts said this week that overdue payments on US consumer credit cards and other loans have begun to level off in recent months after rising earlier this year.

The Zhitong Finance App notes that this trend is in stark contrast to recent data. Recent data shows that the number of credit card loan cancellations across the industry has surged as the financial situation of some Americans has improved.

Mark Zandi (Mark Zandi), chief economist at Moody's Analytics, said: “Tightened underwriting policies after last year's banking crisis seem to be taking effect, as is the slowdown in inflation.”

Citing data from consumer reporting agency Equifax, Zandy said that the delinquency rate for all household debts fell to just over 2% in August, compared to about 2.5% in 2019.

Overdue payments for credit cards, car loans, personal loans, retail cards, and first time mortgages all declined in August, according to Equifax data.

This trend may indicate a more stable financial situation for Americans who have defaulted on payments as the cost of living rises due to reduced savings during the pandemic.

According to data from the US Federal Deposit Insurance Corporation (FDIC), Bank of America's net credit card write-off rate (that is, the amount of loans the bank cannot expect to be able to recover) rose to 4.82% in the second quarter as customers' financial conditions deteriorated. This is the highest level since 2011.

Citigroup Chief Financial Officer Mark Mason (Mark Mason) told investors at a conference on Monday that “the default rate has clearly increased, but it only began to peak in the past quarter or so.” “That's a good sign.”

For months, industry executives have been describing the fragmentation of clients' financial situations, pointing out that customers with lower income and credit scores are more difficult than wealthy customers.

Mason said consumers with lower credit scores have turned their spending to buy household essentials rather than non-essential items.

“We are seeing a flat rate of arrears on the consumer side, which is good news,” Bank of America CEO Brian Moynihan (Brian Moynihan) said at the same meeting.

Zandy said that if the economy and job market remain resilient, consumer defaults could be close to peaking.

Banks tightened loan standards last year as the commercial real estate market deteriorated and investors generally feared that the US economy might fall into recession.

US inflation has slowed in recent months, reinforcing expectations that the Federal Reserve will cut interest rates by at least 25 basis points at the September 17-18 meeting and continue to relax monetary policy.

Susan Fahy (Susan Fahy), executive vice president of credit score modeling firm VantageScore, said the tax cuts would be a relief for some borrowers with variable loan interest rates because their repayment obligations may be reduced.

Wells Fargo also expects net credit card write-offs to decline in the third quarter after maintaining a slight increase in the first half of the year.

The bank's net credit card loan write-off increased by $72 million in the second quarter, compared to $57 million in the first quarter.

“Overall consumers feel good,” the company's chief financial officer Michael Santomassimo told investors this week. “We do expect credit card write-off rates to slowly decline in the third quarter,” he said.

Daniel Pinto (Daniel Pinto), president of J.P. Morgan Chase, said that consumers “are still in a stable position”.