Americans get better at paying credit card debt
The rate of late payments has plunged to nearly a 20-year low. Are we getting more responsible?
The rate of late payments on credit cards has plunged to 0.57% -- the lowest level in nearly 20 years, according to credit reporting company TransUnion. The historical average since 1992 has been about 1.03%, The Associated Press reports.
The amount of money sitting on Americans' credit cards has dropped 16.5% from 2008 to $2.7 billion in June.
It's not that Americans are ditching credit cards altogether. We still carry some pretty hefty balances -- about $4,965 per borrower, on average. And the number of new credit card accounts opened by consumers is going up, The AP reports.
We're just getting better about making payments on time.
Citigroup's (C) credit card index seems to confirm that as well. The company's charge-offs, which are accounts written off as losses, made a 25% improvement over the last year to 2.91%, Quartz reports. And delinquencies have dropped in 35 of the last 41 months to 1.77% in June.
So what's happening? Are we suddenly in a new era of responsibility and self-imposed austerity? Yes, analysts say. "A lot of families have worked hard to deleverage," Ezra Becker, the vice president of research at credit bureau TransUnion, told The Wall Street Journal earlier this month.
Here's another reason: Consumers might be a little clearer about the terms of their credit cards and the penalties for skipping payments, Quartz reports. New regulations discourage banks from sneaky promotions and other tricks designed to make people pay late.
And now that we've cleaned up our financial act, where do we go from here? Shopping, of course. Americans have shoveled away enough debt that they're feeling more confident about borrowing again to buy cars and homes, The Journal reports.
While total consumer debt is now at about $11.15 trillion -- the lowest level since 2006 -- loans for new cars and trucks rose by about $20 billion in the second quarter from the previous quarter, The Journal reports.
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