Credit card ABS quality improved moderately in 2Q12 despite the sluggish U.S. economy and the 8.2% unemployment rate, Standard & Poor's said in a report released yesterday.

Loss rates in 2Q12 for bank and private-label credit cards dipped slightly to 4.1% from 4.2% and 6.2% from 6.3% in the previous quarter.

S&P noted that the U.S. unemployment rate dropped by 10.3% to 8.2% from 9.1%. Meanwhile,  30-plus-day delinquencies dipped by 25% to 2.5% from 3.3% and receivables decreased by 8.7% to roughly $265.6 billion from about $290.9 billion.

For pools that are co-branded and retail credit card receivables, S&P said that three-month average losses dipped by 23% to 6.2% from 8.1%. The 30-plus-day delinquencies decreased by 18.2% to 3.9% from 4.8% and receivables declined by 2.7% to about $53.0 billion from about $54.4 billion, the rating agency stated.

As of June 2012, the U.S. Credit Card Quality Index tracked about $264.3 billion in bankcard receivables and roughly $53.3 billion in private-label/retail card receivables backing S&P's-rated credit card ABS.

While loss rates are looking up, consumers are also becoming more careful with how they use their credit cards.

According to the latest Federal Reserve consumer credit report, consumers have decreased their use of credit cards in June.

The report showed that revolving credit, comprising mostly of credit card debt, slumped $3.7 billion to $864.6 billion in June. This represents a 5.1% dip on an annualized rate.

This was also the second time it dropped in the last three months. The May report reflected the fact that revolving credit had risen $7.5 billion.

For 2Q12, revolving credit decreased at an annual rate of 0.5%, the first dip in three quarters.

Non-revolving credit, including auto and student loans, rose by $10.2 billion in June. This represented an annualized rise of 7.2%. For the quarter, non-revolving credit went up at an annual rate of 7.8%.


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