DBRS in a report released today that credit card delinquency and default rates continued to drop in the third quarter, except for a slight increase in the sub-sector of retail. Retail credit cards are those that can only be used at the stores where they were issued.

A gradual overall decline in credit card defaults started in mid 2010, the rating agency added. 

The payment rates on bank cards also continued to rise while those of retail cards have been generally stable. However, they experienced a slight drop in the past few months.

DBRS said that the average default rate for banks is now at 3.11%, 20 basis points below the level of last quarter, and a good deal lower than the 3.7% default rate posted at the start of the recession in January 2007.

The rate of seriously delinquent loans is 1.61%, which is a far cry from the 2.12% witnessed in January 2007.

The average default rate for retail cards dropped in the first two months of the quarter from 5.12% to 4.6%. In the most recent month, it rose back up to 5.01%.

The levels of seriously delinquent loans in the subsector have generally trended higher as well. DBRS said that the poorer performance of the retail area may be because of seasonality.

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