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Credit charge-offs almost $ for $ for decline in Debt

Consumers paying off debt? Nah! We are not yet a nation of prudent

“What became patently obvious last week when the American Bankers Association released second-quarter data on the nation’s credit picture is that the “good credit behaviors” we keep hearing about of late are mostly hogwash.

“Look at the charge-off numbers for the banks and they are almost dollar-for-dollar the decline in consumer debt,” said Greg McBride, senior financial analyst for “So you are getting headlines about how much better off consumers are, and how they are paying down their debts, but that’s not what’s really happening.”

A recent study by looking at the Federal Reserve’s G-19 Consumer Credit Report G-19 report and comparing it to bank charge-off numbers found that revolving debt was off by $12 billion in the second quarter of 2010, but that banks actually charged off some $21.8 billion in bad debt. What that means is that consumers actually accumulated debt—nearly $10 billion more than the year before—and the only progress was caused by banks giving up on consumers who are too far gone to pay.

CardHub’s latest projection is that consumers will accumulate an additional $26.2 billion in credit card debt this year, relative to 2009.”

So…it’s possible for consumer-credit numbers to improve even while consumer behavior is mostly the same as it’s always been.

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