Many dodge payments in poor economy

04.04.09
By Timothy Jones

Ignoring credit card payments may be a tempting way to avoid yet another bill.

New figures reveal that many who have hit hard financial times are in fact missing payments. Those not paying off their credit cards are causing problems for card companies and potentially hurting their own credit scores.

According to data from Moody's Investor Services, the rate of delinquency - accounts that are more than 30 days past due - rose to a 20-year high in February, moving up to 6.14 percent.

Principal payments also fell to 15.16 percent in February, said Moody’s, partially attributing the drop to the fact that February is a short month.

Finally, banks are finding it increasingly difficult to chase up late payments - credit card write-offs increased to 8.2 percent, marking the sixth consecutive month of such an increase.

These figures do not necessarily indicate a lack of responsibility. "The amount of job losses dealt the economy a severe shock, and that continues to be the biggest driver for delinquencies," James Chessen, chief economist for the American Bank Association, explained to Reuters.

Yet Moody's does offer a bit of hope, reporting that the rate of delinquencies tends to drop as the temperatures improve, "resulting in part from the spring tax refund season."

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