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Charge Card Companies American Express And JPMorgan Chase Are Beginning To Show Profits Rising This Quarter.

Updated reports from JPMorgan Chase & Co. (JPM) show that Americans are doing a much better job at paying credit card payments during the first quarter 2010, contributing to a huge jump in earnings. One of the nation's largest banks and a leading issuer of credit cards, Chase credit cards posted a first quarter profit of $3.33 billion, up from $2.14 billion the same time just a year ago. Helping to keep profits were the fixed-income markets, asset management of commercial and retail banking which offset losses in the credit card and consumer loan portfolios. However, credit losses were $7.01 billion, down from $10.06 billion the same time last year and $8.9 billion the previous quarter.

One of JPM's top competitors, American Express credit cards (AXP) also reported first quarter results. They too reported a moderate drop in credit card losses. First quarter defaults dropped to 7.2 percent down from 7.5 percent for fourth quarter 2009. Credit card delinquencies of 30 days decreased to 3.3 percent down from 3.7 percent the previous quarter. Unlike its major competitors, American Express not only loans credit but is also a major card network that processes card payments as well. The company's portfolio consists of more affluent cards where balances must be paid in full as well as a revolving charge card where consumers are allowed to carry a balance forward.

The decrease in credit card delinquencies is important because these delinquencies are an indicator of card defaults in the future. Most banks follow the standard accounting procedure of writing off credit balances that are 90 days or more past due. Writing off card and loan balances does not relieve the consumer of the responsibility of repayment nor does it end the bank's attempt to recover any of the debt. It does, however, allow the company to take the write-off amount as a deduction.

These profit statements are saying one major thing to me, "the American economy is getting better". If it wasn't we wouldn't be able to see credit card companies showing such profits. My only question is, "is this just a statistical roller coaster or are these number really here to stay?". History shows that the economy has a major recession or depression just about every eighty or so years. When the economy goes through one of these world wide recessions, there are usually a few points in time where the world economy will fluctuate, as we have seen throughout this one. However, I sincerely hope that this patter continues to be on an upward motion. One way to make sure this happens is simply not to pay payments on loans late or forget about your payments. It will take all of us to fix the errors that were made in the past!