A sign consumers are on firmer financial ground

From USA Today:

Credit Card Payment Problems Fall
Five of the six biggest credit card companies showed fewer card holders falling behind on their payments in October and fewer balances being written off by the companies, which in the past few years have written off billions of dollars as uncollectible. Four of the six biggest issuers, including the largest, JPMorgan Chase, reported their lowest levels of bad debt and late payments this year. Only Bank of America reported an uptick in loans it gave up trying to collect, to 10.15% of balances from 9.98% in September.

The largest drop in charge-offs was reported by Capital One, which said it wrote off 7.26% of blances, down from 8.38% in September. Chase and Discover Financial Services posted more modest improvements. The charge-off rate at American Express was flat at 4.7%, the lowest among the six largest card companies.

So…what does this mean for independent brick and mortars? A couple of things:

1. Consumers are getting a handle on their spending again, as well as how they manage money. This is a good thing for anyone in the holiday gift game, since the more financially sound shoppers are, the more likely they’ll spend responsibly (as opposed to simply snapping their wallets shut as they slither past store doorways).

2. The fact American Express is showing the lowest charge-off rate is especially good, as AmEx card holders represent the highest spending consumers in the US marketplace. For those of you in upscale retail, as well as those catering to corporate clientelle, this reflects stability in key demographics.

Responsible spending has been a tough pill to swallow for consumers, and a shock to the system for merchants who watched cash flow dry up the past two years. Now that the learning curve seems to be leveling out, and consumers are learning to live within their means, my guess is holiday shopping will feel good again–not like a trip to the dentist.*

Think of it all as baby steps in the right direction.

* My apology to dentists everywhere who take issue with my equating pain with your chosen profession.