Fewer people default on credit cards

Most major credit card companies say fewer customers defaulted on their accounts in July, but that doesn't necessarily mean they're financially better off.

A few credit card issuers say more families fell behind on payments, which could be another sign that household finances have yet to recover from the recession.

With more than 6 million people living on unemployment benefits and the recession continuing to pressure family budgets, many are forced to prioritize their bills. The reality is that credit cards often fall to the bottom.

Credit card companies have been trying to limit their risk over the course of the last year. Major credit card issuers reporting monthly results say the rate of losses from unpaid accounts improved from June to July.

American Express Co., Bank of America Corp., Capital One Financial Corp., Citigroup Inc., Discover Financial Services and JPMorgan Chase & Co. all say the number of account balances written off because of nonpayment fell.

American Express, for example, said its net loss rate fell to 8.9 percent in July from 10.2 percent the month before. Bank of America fell to 7.58 from 7.73 and Chase saw a drop to 7.92 percent from 8.04.

What's more, most of the major card issuers also reported more customers making payments on time.

The positive trends don't necessarily mean consumers are suddenly in much better financial shape.

Some of the uptick is more likely because of credit card companies culling the riskiest customers, which will in time lower default and delinquency rates, said bank industry analyst Richard Bove of Rochdale Securities.