Fewer consumers were late on their credit card payments for the fourth consecutive month, a sign that U.S. consumers may be on the mend, according to a report Fitch Ratings released Friday. Payments that were 60 or more days late dropped to 4.18% in May, from 4.27% in April.

Early-stage delinquencies — or payments that were 30 or more days late — fell to 5.53%, from 5.74%. A year ago, early-stage delinquencies were 6.14%.


But while delinquencies improved, chargeoffs rose as persistently high unemployment rates and higher personal bankruptcy filings continue to reflect the ongoing strains consumers are facing. Sustained improvement in payments will hinge on the employment picture, however, noted Michael Dean, a managing director at Fitch.

"Charge-off rates have been holding steady at over 10% for a full year now so the pressure on U.S. consumer credit quality is still clearly evident,' says Dean. "On the positive side, cardholder defaults have plateaued so some seasonal improvement should emerge as we head through the summer months."

The portion of balances charged off by banks rose to 11.1%, from 10.93% in April. A year ago, the charge-off rate was 9.66%.

Banks charge off loans as unrecoverable after they are 180 days late.

Charge-off rates have been elevated at over 10% for about a year now. The average charge-off rate for the year through April is 11.17%, compared to 8.59% for the same period last year.

Fitch's credit card index includes general purpose portfolios originated by companies including Bank of America, Citibank, Chase, Capital One and Discover.

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